The Schwab Platinum Invest with Rewards Rumor: 1.5 cash out?

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In addition to American Express’ generic consumer Platinum card, there are two current co-branded variants: The Platinum Card from American Express Exclusively for Morgan Stanley and the American Express Platinum Card for Schwab.  For a complete comparison of these cards, along with the Business Platinum card, please see: Amex Platinum Complete Guide.

One thing that sets the Schwab Platinum card apart from the others is the ability to “Invest with Rewards” at a great rate.  The Schwab Platinum card allows you to convert Membership Rewards points to cash at a value of 1.25 cents per point.  The Morgan Stanley card, meanwhile, only allows conversions at a value of 1 cent per point.  Options for cashing out rewards with the generic Platinum card are worse.

Now, it seems that the Schwab advantage might be going away.  Doctor of Credit reported: American Express Charles Schwab To Lose The 1.25¢ Cashout Option? (Maybe, Landing Page Language Removed).

No more 1.25 language

Here’s the situation in a nutshell: The landing page for the Schwab Platinum welcome offer used to advertise the “Invest with Rewards” feature with the following words: “You can use 60,000 points for a $750 deposit from Schwab into your eligible Schwab account.”  Now, those words are simply gone.

The terms of the offer still explicitly state that you can Invest with Rewards, but the terms (as was the case before) do not specify the value of your points when you do so.

Possible reasons they erased the 60K to $750 language

I think that there are several plausible reasons that Schwab removed “You can use 60,000 points for a $750 deposit from Schwab into your eligible Schwab account” from their splash page:

  1. Simplified message.  It’s possible that Schwab and/or Amex just wants to simplify the high level marketing message.  Many, many other perks are not shown on the offer page but that doesn’t mean those perks are going away.
  2. The standard bonus will be changing soon and/or become dynamic.  The current language is written the way it is because the standard bonus for the Schwab Platinum card is for 60,000 points after $5K spend.  If they were aware that the bonus would soon change, they may have wanted to avoid having to make multiple changes to the splash screen to account for this text.  Additionally, Amex has been dynamically changing the offer for their own Platinum card by targeting people with 75K, 100K, and even 125K offers.  If there are plans to do something similar with the Schwab Platinum card, then it makes sense that they’d want to simplify things by removing the text that refers to “60,000 points”.
  3. The Invest with Rewards feature is going away entirely.  I don’t think this is likely at all, especially since the terms still include this feature, but I’m including it to be complete.
  4. The value of Investing with Rewards will drop to 1 cent per point (or worse).  This seems to be the outcome most people expect.  It makes some sense since the Morgan Stanley Platinum card offers Investing with Rewards at a value of only 1 cent per point.
  5. The value of Investing with Rewards will go up.  We are so used to credit cards losing valuable perks that this seems unlikely, but there’s at least a tiny bit of evidence of this.  One Doctor of Credit commenter wrote:  “Take this with a grain of salt, but got off the phone with someone at Schwab and they said they have an internal memo from 5/20 that says redemption rate will be 1.5%.”
  6. Invest with Rewards is changing to a tiered payout.  One option is that they could move to a tiered option where you’ll get more value with more points.  For example, maybe you would get 1 cent value when redeeming less than 100,000 points, 1.25 cents value when redeeming 100K to 500K, and 1.5 cents value when redeeming 500K or more.  Another option, which is think is even more likely, is that they’ll offer a better payout if you have more money invested with Schwab.  Anthony writes:
    “Another possibility that I believe is plausible is a tiered reward based on your total deposits with Schwab, similar to the appreciation bonus. People that are just opening small accounts and cashing out is probably not what Schwab had in mind and are probably not profitable. So possibly total assets of $1 – $250K = 1 cent, $250 – $1M = 1.25 cents, > $1M = 1.5 cents.”

An argument in favor of 1.5%

If Amex had to completely foot the bill for the Invest with Rewards feature, I’d be 100% sure that value of points would drop.  But, it seems to me that Schwab must be augmenting the deposits from Amex.  Otherwise, why would Amex let Schwab cardholders get a much better feature than their own unbranded Platinum cardholders get?  For example, maybe Amex gives Schwab 1 cent per point and Schwab then makes up the difference.  Why would Schwab do this?  Think of it as an account funding promotion.  Brokerage accounts often run promotions offering cash bonuses for funding new accounts to certain tier levels.  And sometimes they run promotions offering cash bonuses for adding new money to existing accounts.  The Invest with Rewards feature is like the latter.  Schwab may be partially funding this feature as a way of attracting new money to their accounts.

It seems possible to me that Schwab has found that Invest with Rewards customers are more profitable to them.  For example, maybe they found that a number of their big customers came to Schwab because of this feature.  And so maybe they figure that increasing the payout to 1.5 cents per point will attract many more big customers.

Businesses give away money only when they believe that the end result will mean making more money.  That’s why banks offer big signup bonuses for new bank accounts and new credit cards.  This could be the same type of thing.  Just as credit card issuers have been offering bigger and bigger signup bonuses lately, maybe Schwab is planning to increase their Amex to Schwab “transfer bonus.”

Let me be clear: I’m not saying that a 1.5 cent payout is likely.  All I’m saying here is that it is conceivable.

What’s your bet?

Do you think the 1.5 option is likely?  Why do you think the landing page dropped the 60K to $750 language?

  1. Simplified message
  2. The standard bonus will be changing soon and/or become dynamic
  3. The Invest with Rewards feature is going away entirely
  4. The value of Investing with Rewards will drop to 1 cent per point (or worse)
  5. The value of Investing with Rewards will go up
  6. Invest with Rewards is changing to a tiered payout.
  7. Add your own answer: ___________________________

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