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Having sat in data presentations from credit card companies, the extent of the data that credit card companies have is incredibly detailed. For those customers who they don't make money on from interest and fees alone, I would imagine that data more than covers the difference. These customer are still VERY desirable from a data perspective.

While there are legitimate tracking concerns, the data the credit card companies capture and disseminate is incredibly fascinating. You've got spending data, layered with market segments, layered with location data (both on the cardholder and the business side), and even time of day. Overlay all that with very accessible data from the Census or ESRI, and they can really tell a significant story of how money flows through the modern economy. This is what's feeding the internal fraud detection engines (which have gotten a lot better), but there are also private institutions that are more than willing to pay the credit cards a hefty sum to get access to all this data.

> It is possible, given the design of individual products, that a user with close-to-optimal spending decisions is contribution margin negative on individual products and potentially on all accounts

I feel like that user is typically the sort who enjoys telling anyone who will listen about how they managed to get great rewards from their card. With all that free marketing, the credit card issuer is probably happy to have them as a customer, even if they lose a little bit of money on them.

FWIW: I think technologists are far too quick to jump to "I bet they want to do it for free marketing" and far too slow to think "I bet they have a large team of people who does almost literally nothing other than study this exact question, has thought about it for hundreds of thousands more hours than any credit card user has, and has a highly developed technical infrastructure capable of authoritatively answering it."

It is a curious, curious belief in the engineering community that we are better at trivial math than banks are. That is not a bet I would encourage people to make.

Oh, I don't doubt that they have a very sophisticated model for this. I'm just saying they probably take customer acquisition cost into account in the model too.

"I bet they do it for free marketing" doesn't mean "I bet they didn't do the math". It means "I bet their marketing department measures everything and is good at math too."

I see this pattern almost weekly with engineers (both online and offline). The hubris is fascinating. (Full disclosure: I was often guilty of this myself for the first decade-plus of my career.)

The current discussions around Covid and vaccines made me realise I am continually guilty of this hubris. I've heard people say before "whenever I see a discussion on a subject I am an expert on, HN is full of ignorant commenters", but I feel it far more viscerally now.

The first stage was: these anti-vaxxers don't have a degree in immunology, what makes them qualified to even attempt to interpret scientific papers on the subject?

The second stage was: wait, I don't have a degree in immunology either, why am I pretending to be "following the science" when I don't have even the vocabulary or the context to properly grasp immunology papers?

Accepting that I am a functional ignoramus with regards to Covid, viruses, immunology, vaccine development etc. is very freeing. I'm basically knowledgeable on very few things, and am not an authority on (vaccines|economics|law|history|basically everything). Being good at software engineering doesn't make me an expert at everything I read two articles on.

But you have expertise in at least one field, which confers to you an improved ability (relative to someone who is expert at nothing) to recognize expertise vs ignorance. This is, as I understand it, a fairly straightforward conclusion based on the Dunning-Kruger effect.

Reminds me of:

> The entire fintech sector rules because it’s tech ppl looking at a 500 year old sector that accounts for 10% of the economy and employs some of the smartest and most ruthless people in the world and saying “You know what, I bet these guys are leaving a lot of money on the table” [0]

[0] https://twitter.com/quantian1/status/1447705628521152517

God, this is so accurate.

> It is a curious, curious belief in the engineering community that we are better at trivial math than banks are. That is not a bet I would encourage people to make.

Although sometimes people are right on that bet, disrupts an entire industry and becomes billionaires. Entire industries can turn a blind eye to problems that are obvious to some, and later it turns out the industry experts were wrong.

So I wont stop making simple back of the envelope calculations and discuss and judge industries based on that. In most cases you are wrong when you do it (which you'll realize when you dig down a bit further), but sometimes the industry is wrong and you really don't want to miss those cases.

You can say that, but then some of us hear about events like [1] [2] [3] that make you wonder how in the world wealthy financial services companies with their almighty teams could not foresee rather blatantly obvious things like (say) the possibility of enthusiasts using their cards to get cash back from tax payments.

Or, for example, why do so many banks give several-hundred-dollar "direct deposit" bonuses to people who just do a normal ACH transfer to themselves, despite explicitly claiming that they only allow employment income. Surely that's unintentional rather than being some kind of customer acquisition reverse-psychology tactic?

[1] https://www.doctorofcredit.com/paypal-key-will-stop-allowing...

[2] https://www.doctorofcredit.com/paypal-key-no-longer-working-...

[3] https://www.doctorofcredit.com/rumor-plastiq-to-stop-allowin...

Even they have their limit. I remember banks going crazy with cash back for opening credit cards, and then 6 years ago, Chase released Sapphire Reserve which basically gave people $1,500 to $2,000 upfront, and then after that I feel the churning scene significantly died down since Chase ended up taking huge losses for that. My wife and I basically got $3k or $4k I think for taking a few minutes to fill out a credit card application.

I imagine all the other banks were not impressed, and ever since then, you can get a few hundred dollars here and there but nothing like the initial Sapphire Reserve promotion came out since.

That is definitely still a thing. I get AMEX offers regularly equivalent to $1200 in rewards.

It is not the same as sapphire reserve and before times. Even the churning subreddit kind of died not long after. The Amex ones are rewards points, and you have to play a lot of games to get the value. Used to be really simple to get large basically cash or cash equivalent rewards.

> It is not the same as sapphire reserve and before times.

If I'm not wrong, cashing out Chase Ultimate Rewards points wasn't that lucrative until recently, when they introduced Pay Yourself Back — it was 1 cent per point before, and is much higher now for certain categories (groceries, restaurants) with Pay Yourself Back.

> The Amex ones are rewards points, and you have to play a lot of games to get the value.

For US residents, cashing out at 1.1 cents per point would be opening a Charles Schwab brokerage account and the linked Amex Platinum card, then "investing" the points. That doesn't sound too complicated.

(Speaking as a non-US resident playing the game myself: I do have extreme difficulty trying to get good cash value for my points, since Schwab refuses to open a brokerage account for me.)

Chase Ultimate Rewards got heavily nerfed since the Sapphire Reserve release. For the first couple years, you could get 1.5 cents per point for any travel (flight, car rental, hotel), and the price on the chase ultimate reward portal was the same you got via the actual airline or car rental or hotel website (i.e. the cheapest price.)

Then they made it so you had to use ultimate rewards via Expedia, and they bumped up all the prices, so effectively your UR points lost a ton of value. Searching the same flight on Expedia UR website was more expensive that directly going to the airline.

Then I stopped following because I had already canceled all my UR cards, but I assume they downgraded it even further because I heard they raised fees and substituted some benefits with door dash or lyft credits or something.

> For US residents, cashing out at 1.1 cents per point would be opening a Charles Schwab brokerage account and the linked Amex Platinum card, then "investing" the points. That doesn't sound too complicated.

I did not know this, but that seems okay. However, I have experience with AmEx being strict on people who constantly open cards for sign up bonuses.

Amex explicitly no longer offers me sign-up bonuses because I'm not a profitable customer for them.

It is a tangled tangled web, but if in fact the "folks like us" are actually profitable, due to fees charged to merchants, there is disruption waiting to happen in that arena, perhaps by some huge merchant somewhere (Amazon? Walmart?)

>The "folks like us" archetype is one which is definitely tracked and goes by different names at different places.

Out of curiosity, what names does that archetype go by?

The term for us, who pay off their entire balance every month, is "deadbeats".

That’s an interesting term for “profitable customer who pays their debts”

I'd be much more profitable to them if I didn't pay the debts, and they'd accrue the usurious interest charges.

I found this out (and the term) after discovering my credit score was lower than I expected. With some investigation, it was low because it showed I had a lot of credit card debt. Paying it off each month did not factor into the credit score.