What a Card Offer Really Costs the Bank, and Why Yours Keeps Changing

You got the letter or the app notification: the cashback category is changing, or the cap is dropping, or the lounge visits now need a minimum spend. It feels arbitrary. It usually is not.

A card reward is funded from a small set of income streams, and when any of them moves, the offer built on top of it has to move too. Understanding the funding explains why terms get revised on a schedule that has nothing to do with you.

Where reward money comes from

A bank pays for your cashback out of what the card earns. Broadly, four sources.

• Interchange. A share of each transaction paid by the merchant's side of the chain to the card issuer. Rates differ by card type, merchant category and scheme rules.
• Interest. Balances carried past the due date. This is often the largest single line for a card portfolio, though it depends heavily on customer mix.
• Fees. Annual fees, late fees, cash advance fees, over limit fees, and foreign exchange markups on spend in other currencies.
• Partner funding. Where a merchant or airline pays part of the cost of an offer because it brings them customers.

That is the pot. Everything on the marketing page comes out of it.

Why the pot moves

Each source has its own weather.

Interchange is set by scheme rules and by regulation, and both get revised. When a regulator or a scheme adjusts what a merchant pays, the issuer's income per transaction changes without a single customer doing anything differently. Rules and rates vary by market and by card, so check current terms rather than assuming. The volume underneath it grew as the country moved from cash on delivery to tap and pay.

Interest income moves with rates and with how customers behave. A portfolio where more people pay in full every month earns less than one where balances roll. Reward programmes that attract disciplined payers can quietly reduce their own funding.

Fees move with competition. Once several banks advertise a fee waiver, holding out becomes hard, and that same pressure is why so many cashback cards launched in the first place.

Partner funding moves with the partner's own budget. An airline or retailer that stops co funding an offer takes a chunk of the economics with it.

The customer mix problem

Here is the part that surprises people. Two customers on the same card can be worth very different amounts to the bank.

Someone who spends heavily in the bonus category, pays in full, uses the lounge every trip and never pays a fee is expensive. Someone who spends moderately, occasionally carries a balance and pays a foreign exchange markup on holiday is profitable. The card is priced for an average of the two.

When the mix drifts, the average breaks. If a card attracts too many customers of the first kind, the offer stops covering itself. The bank then has three options: raise the fee, cut the reward, or add conditions that reshape who finds the card attractive. Adding a minimum spend or a cap is the least visible of the three, so it tends to happen first.

Why the change usually lands as a small edit

Banks rarely withdraw a card. They edit it.

• A category is redefined, so a merchant you used to earn on now sits outside it.
• A monthly cap appears, or an existing one drops.
• A minimum spend gate is added before the good rate applies.
• A benefit moves from unlimited to a fixed number of uses per year.

Each edit is small enough to fit in a notification and large enough to change the economics across thousands of accounts. Regulatory notice requirements and how much warning you get vary, so read the messages your bank sends rather than assuming they are routine.

What to do about it

You cannot control the funding. You can control how quickly you notice the change.

• Re run your own numbers once a year, and again whenever a terms notification arrives.
• Compare against what your statement actually shows, not against what the card promised when you took it out, which is easier now that your statement can be shown to a service you choose.
• Treat any card as a decision with an expiry date, because the product behind it is being edited continuously.

This is the recurring job Wealthwise handles. It reads your card statement on your own device, uploads nothing, and ranks 19 UAE cards from 8 banks against your real spending in dirhams, including the annual cost of staying on a card that no longer fits. It gives advice only: it never moves money or places trades. Launching early 2026.

The one line version

Your card offer changes because the income funding it changed, or because the customers it attracted were not the ones it was priced for. Neither is personal, and both mean the right card for you in one year may not be the right one in the next.