Banks Are Banks. Airlines Are Airlines. Can We Move On?

Every few months, a think piece resurfaces claiming that airlines are “really just loyalty programs with airplanes attached.” It pairs nicely with the evergreen take that “Starbucks is basically a bank.” Cute line. Still wrong. (The latest culprit is The Economist.)

What a bank actually is (and why Starbucks isn’t one)

Banks are banks because they do bank things under bank rules. That means:

• They’re heavily regulated and must know who their customers are.
• They accept deposits and hold them as insured liabilities (hi, FDIC).
• They move money that is fungible: a dollar in is a dollar out, anywhere, to anyone.
• They manage liquidity, capital, and risk so the whole system doesn’t tip over.

Starbucks? It’s a great coffee chain with a very large stored-value and loyalty program. Your Starbucks balance is a prepaid claim on lattes, not a checking account:

• You can’t pay your rent with Starbucks balance.
• You generally can’t send it to other people.
• It doesn’t earn yield.
• If Starbucks went bankrupt, your gift card would likely be treated like other unsecured claims. It’s not FDIC insurance; it’s coffee IOUs.

Loyalty points live in the same neighborhood. They’re useful, sometimes valuable, and almost always non-transferable to cash without friction or haircut. They are not money; they are coupons with better PR.

My well-loved Starbucks Gold card. Still not a bank.

Airlines without points would… still be airlines

Run a thought experiment: say today’s politicians decide frequent-flyer programs are illegal. Do airlines evaporate tomorrow? Of course not. They’d reprice.

Loyalty economics currently subsidize ticket prices and customer acquisition—banks and card issuers pre-buy a massive volume of miles and points, effectively fronting airlines' marketing revenue. Remove that, and fares would shift accordingly. That’s not an existential crisis; it’s a revenue mix change.

So, no, airlines are not secretly loyalty companies cosplaying as carriers. They’re carriers with a highly profitable marketing arm. Core business stays core.

Rewards “gotchas” people love… and why they’re mostly wrong

Two greatest hits:

1.  “Credit card rewards make everything more expensive for everyone.” Reality is more nuanced. Merchants price to their own margin targets, not to spite points people. Interchange is one input among many (rent, labor, shrink, logistics). And yes, card programs are designed so banks make money across a portfolio—interest from revolvers, interchange from spend, fees, breakage from unredeemed points. It’s not a charity, it’s math.
2.  “Banks are losing to optimization ninjas.”A tiny fraction of consumers squeeze every last basis point out of points. Most don’t. Reading The Points Guy once and setting up one bonus category is not the same as relentlessly arbitraging every offer, every month. Banks are very familiar with adverse selection; they price and manage for it. The portfolio economics still work or programs would be sunsetted, not expanded.

This person read The Points Guy once and look them now!

What’s actually interesting in loyalty right now

Instead of reheating bad metaphors, let’s talk about where programs are getting smarter:

• Rewards on non-travel life spend. Bilt proved that rent can be a primary rewards category without blowing up underwriting or landlords. Others are pushing into mortgage, auto, and insurance payments with creative mechanics and risk controls.
• Category relevance over generic points. Retail-anchored ecosystems (Rakuten is the obvious example) make points feel like currency within a defined universe. That’s not money—it’s utility—but it’s sticky utility.
• Better engagement loops. Modern programs are dialing in frequency, small wins, and cross-partner earn/burn. When done well, points feel like progress, not a spreadsheet hobby.

Some of these come from new issuers and platforms you haven’t heard of yet; some come from big brands that finally figured out their data plumbing. Either way, this is where the action is—not in tortured claims that Starbucks is a shadow bank or that a 737 is a flying punch card.

The bottom line

Money is money. Points are points. Gift card balances are coffee futures. Airlines fly planes; their loyalty programs help fill seats and fatten margins. Banks finance the ecosystem and, unsurprisingly, design it to be profitable at a portfolio level.

We can keep pretending these are edgy contrarian takes, or we can focus on the genuinely interesting problems: building rewards that map to real-world behavior, balancing utility with economics, and making the earn-burn journey feel like progress instead of homework.

Now, if you’ll excuse me, I’m going to use my very not-a-bank Starbucks balance to buy a cold brew. (Not with my Gold card – I use the app now.)

Americans Pull Back

The Wall Street Journal reported that consumers are pulling back from spending. (They even found someone with as many cards as me. Unfortunately, she has a huge balance; I pay in full each month). Data from Visa and Mastercard charted by the paper shows a decline in year-over-year spending growth :

From The Wall Street Journal

Between inflation concerns and the overhang in spending, I’m not surprised we’re down from those highs. Of particular note is the moderation in credit card growth alongside growth in debit cards. All-in, however, card spending is still growing faster than inflation as more payments shift to electronic methods. This note stood out to me:

When credit-card spending growth began trailing debit late last year, it ended a streak of 14 consecutive quarters in which the opposite was true. It is a reversion to the prepandemic norm. 

Either way, cards are winning. 

Credit Card Satisfaction

J.D. Power runs an annual credit card satisfaction survey and released their 2025 findings. A lot of the findings are unsurprising: people with more income like their cards more. People with less income are less satisfied. Two items stood out to me:

1. Higher annual fees linked to higher overall satisfaction! (People paying >$500 on their annual fee have better experiences.)
2. Sixty-five percent of cardholders have been charged higher prices to use a credit card. For those consumers, 81% say the surcharge caused them to pay another way.

American Express ranked highest for satisfaction (sixth year in a row). The Platinum Card from American Express ranked highest in annual fee cards, following by the under-the-radar BofA Premium Rewards Elite and the Amex Gold Card. The Citi/AAdvantage Executive World Elite Mastercard Card ranked longest card name. No wait, ranked highest for airline co-brands. That one surprised me, too.

Centurion is so … meh

The Rem Koolhaas version is only for those who can spell Koolhaas without the internet.

Speaking of customer satisfaction and Amex, paragon of journalism the NY Post  reported that the Amex Centurion Black card is loosing its status appeal. Fintech startup Atlas Card was noted as an up-and-coming super-premium product. What’s a key problem: airport lounge overcrowding. 

GM Launches a Business Card

Shown here on the seat of an electric delivery van, I assume.

Barclays recently took over the GM consumer card from Goldman Sachs (See CardsFTW #105). Now they have launched a small business card with GM. The card has potentially high earning rates for GM-loyalty business owners, although I’m unclear how useful these points are with fleet purchasing. Cardholders earn:

• 100,000 points as a signup bonus (spend $5K in first 5 months)
• 7x points on GM products
• 3x points on everything else

There is no annual fee, an intro 0% APR offer, and complimentary employee cards (although the purchase APR can range up to 32.99%!)

Past reviews of the GM cards have led me to believe that these points aren’t what they seem to be, but if they are and you want a new super-cute electric delivery van, this could be for you.

electric car, you drive so far

CardsFTW

CardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more.

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