What Will Happen To Existing American Express JetBlue & Costco Cardholders?

In case you didn’t already know, American Express will be losing their co-branded credit card partners: JetBlue & Costco. Some people have been asking what will happen to people who already hold those cards. Let’s have a look at the different options card issuers have, how they decide which option to use and my predictions for those two cards.

Options

There are basically three options:

1. Cardholders keep their cards with the same or similar benefits. This is what is happening with the Barclaycard US Airways card, there is going to be a slight re-branding and obviously all points earned and benefits will be for American Airlines instead of US Airways but Barclaycard will still be managing the card.
2. Cardholders will be transitioned to the new product. This is what is happening with the Chase BP cards, if you have one of these cards you will no longer be dealing with Chase – you’ll be dealing with Synchrony. Your account opening date and all other details should stay the same. You’ll also be switched to whatever differences there are in the rewards or benefits programs as well.
3. Cardholders will be product changed to a different card from the same card issuer. Let’s say you have a credit called from a fictional store called Bankers Surprise and it’s issued by Big Bank. Big Bank loses that contract, but instead of you being transitioned to the new product or keeping the same card Big Bank instead moves you to their Big Bank standard card. This is an example of a product change to a different card from the same card issuer.

How Do They Decide?

It’s really based on the original contract that the card issuer and co brand partner have and what the new card issuer wants to do. In general, the new card issuer is given the option to purchase the back book (e.g all existing cardholders) from the original card issuer. This is what typically happens though:

• If the card issues a rewards currency (e.g airline miles or hotel points) the card is converted to the new card issuers product. This is because the card issuer needs to purchase the rewards currency on a regular basis, doing so is relatively cheap when purchasing in bulk but if you’re no longer issuing new cards then the amount you’re purchasing will dip significantly. This gives the co branded partner additional bargaining power which allows them to get a good deal for the back book for the new card issuer.
• There exception to this is if there is a merger. Things get much more complicated when there is a merger, that’s because in this case the original card issuer will usually still have a contract that needs to be fulfilled. This allows them to get a great rate for points and to continue servicing their existing cardholders.
• If the card issues cash back or similar it will be changed to a different product from the same card issuer. In this case the new card issuer will not purchase the back book and the original card issuer will simply covert cardholders to one of their other products.

My Predictions

• The American Express JetBlue card will be converted to the new Barclaycard product. This reasoning follows what I outlined above, but we also have an additional piece of data. Barclaycard had a job posting on Linkedin, the job title was “JetBlue Customer Marketing Barclaycard“. One of the things they would be responsible for is “Create activation strategy for new and converted accounts“. This is a pretty clear indication that Barclaycard will have access to existing American Express cardholders.
• TrueEarnings from Costco and American Express cardholders will have their card converted to another American Express card. This is another situation where we have a bit more data to back this prediction up, last year American Express Canada also lost their Costco partnership. Canadian cardholders  will reportedly be changed over to the American Express Simply Cash product. In the States we don’t have this product, but it looks identical to the Blue Cash card. American Express might even give cardholders the choice of choosing between the Blue Cash card and the AmEx Everyday cards (and possibly the preferred version of each).

Obviously all of this is simply speculation, although I’m fairly confident that what I’ve outlined above will eventuate (I did predict that American Express would lose the jetBlue contract). Tomorrow we’ll look at whether it’s worth getting either of these cards before American Express no longer issues them. Let me know what your thoughts are in the comments.