What is the concept of “grandfathered credit cards”? This is a concept that is thrown around a lot, but let’s further clarify what it entails. Most people who are highly active in the miles and points industry are quite familiar with this topic, so this post may not be relevant to you. But if you want to learn about the different variations of grandfathering a card, then keep reading!
This post breaks down the various ways that a credit card company can grandfather a card.
Not Open to New Applications but Maintain Existing Cardholders
This is probably the most commonly known way of grandfathering a card. Basically credit card companies stop receiving new applications, but existing cardholders can continue to hold their cards without any changes. Furthermore, existing credit card holders can continue to renew their cards until they decide to cancel. But once they cancel, they will not be able to reactive their card anymore.
Some examples of this include the:
Initially, when they stopped accepting new applications, existing cardholders can continue to use their cards. However, eventually, even grandfathered cardholders had their cards terminated (read more about this topic by clicking the two links above). So grandfathering a card is indefinite, but they can still be terminated any time.
Grandfathering Only Account Profile
This is the scenario where they stopped new applications and want to cancel the cards of existing cardholders as well. The one thing that they will honour is your account history, along with your credit limit. In this case, they will give you the option to do a “product switch”. Basically, you will be allowed to switch to another product (within the same company) without needing a new credit card application (i.e. no credit check) and they maintain the account history (which helps with your credit score).
This option is always appreciated, especially for people who do not want to go through another credit check just because of a product being completely discontinued.
Maintaining Features and Benefits due to Changes
This type of grandfathering occurs when there is a major devaluation to a card. In this case, the credit card is still open to new applications, but because the changes to the card is mostly negative, it’s almost like a brand new credit card anyway. Because of this, existing cardholders would continue to benefit from the previous terms and conditions (so long as they kept their card), but new cardholders are under the new terms and conditions. The best example of this is the:
At first, this card had a major overhaul, mostly negative. However, existing cardholders were not affected by the changes, so business as usual. Only new cardholders fell under the new rules (read more about this topic by clicking the link above).
Eventually, Capital One stopped new applications as well, but they continue to maintain existing cardholders. The added twist is that they are maintaining 2 sets of grandfather cardholders, those under the old and new terms and conditions.
Example of the Rogers World Elite MasterCard
This brings us back to the first sentence of this post, on whether the Rogers World Elite card, which has some negative changes, will be able to maintain their existing benefits like Capital One did. Below is a quick recap of the changes:
- From earning 4% cash back (on all foreign purchases) to 3% in cash back (made in USD only)
- From earning 2% cash back (on Rogers products and services) to 1.5% in cash back
- From earning 1.75% cash back (on all other purchases) to 1.5% in cash back
- Addition of Global WiFi for the primary cardholder
As you can see, there are mostly negative changes. At the moment, unfortunately existing cardholders will not benefit from the old terms and conditions.
On a side note, the changes only come into effect on July 1, 2020, so Rogers Bank still has time to change their mind. So here’s an idea for Rogers Bank. I hope that this is a marketing ploy where they tell us that everyone’s cards will changeover to the new rules, but at the last minute, they tell us that they will grandfather existing cards. I emphasise last minute, because by then most “flacky” (from their perspective) customers will have cancelled their card and loyal customers will be rewarded for sticking around.
Am I being too hopeful about Rogers Bank? Please let me know in the comment section below.
It is always sad to see a good card go. So grandfathering a card is a great way to show existing customer loyalty because it is greatly appreciated. I wish more companies are able to do this because more often than not, we see cards eventually completed being discontinued.
What experiences do you have with grandfathered cards? Please let us know in the comment section below.