Saving $2,897 in annual fees: a Card Talk intervention

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Kenny Rogers once said that you’ve gotta know when to hold ’em, know when to close ’em. Hmm…maybe that wasn’t exactly right. It was something close. Yesterday, Greg and I talked to a reader named Jim. One thing I know about Jim is that he is not a Kenny Rogers fan: he came to Greg and I holding credit cards with cumulative annual fees of $4,523. He needed an intervention. It was time for Card Talk.

Jim’s situation is admittedly much different than the average reader because he travels so much — but Greg and I were able to help Jim cut out $2,897 in annual fees. Here’s what Jim had, what we recommended, and what you can learn from it.

Jim’s burgeoning wallet

Stephen's wallet 2
So this isn’t really Jim’s wallet. It’s Frequent Miler writer Stephen Pepper’s wallet, proof that maybe we need to have him on the show next.

I’m sure that Jim doesn’t actually carry a George Costanza-esque wallet (though if he did maybe necessity would have taken care of what we did yesterday without our help!). It’s also worth noting that Jim is playing in 2-player mode, so not all of these cards are in his name. Still, here’s the list of cards he and his wife were holding, written as a general outline (I’m adding up cumulative fees over various cards in each instance as the individual cards don’t much matter in some cases):

  • 4x Southwest Airlines credit cards (3 business, 1 Priority) ($546)
  • 2x Ink Plus ($190)
  • 1x Ink Business Preferred ($95)
  • 5x Marriott Bonvoy credit cards (including 2 biz, 3 personal) ($509)
  • 2x Hyatt (old credit card) ($150)
  • 2x IHG Select (old credit card) ($98)
  • 1x IHG Premier ($89)
  • 1x Mileage Plus Explorer ($95)
  • 2x Chase Freedom ($0)
  • 2x Chase Sapphire Reserve ($1100)
  • 5x American Airlines credit cards (4 Citi, 1 biz, 1 Aviator) ($481)
  • 1x Delta Gold credit card ($95)
  • 1x Amex Platinum ($550)
  • 1x Hilton Aspire ($450)
  • 1x Choice Privileges ($0)
  • 1x Radisson Rewards ($75)

Again, those are total cards between two people. For almost anyone looking at this, $4,523 is a lot in annual fees. It’s worth noting that Jim readily admitted that he opened most of these cards for welcome bonuses and then just didn’t cancel them. Most of us playing this game have been guilty of the same once or twice. Heck, I just wrote last week about how hard it was to break up with the Citi Prestige even though I knew its time had come. So I held no judgment for Jim. He knew it was time to ask for help in reducing these expenses and we were glad to do it.

What we recommend

Before we got started on Jim’s intervention, I had two initial questions to resolve at the very beginning:

  1. How often do Jim and his wife travel? (i.e. how many times per year / for how many nights)
  2. Where do they usually stay?

My curiosity on these two points was tied to why Jim had so many different hotel credit cards; I’d think that most people would have difficulty using the 11 free night certificates they received annually without dedicating travel almost entirely to free night certificates. If his travel was centered around free night certificates, that might make a difference in terms of which points he should collect and which cards to keep/cancel.

Ultimately, Jim’s answer made a lot of difference in how we handled everything: Jim told us that he and his wife are retired and travel about 6 months per year, usually cruising to and from Europe, flying almost exclusively Southwest domestically and rarely flying long-haul (since they usually cruise across the ocean). That made a huge difference. If you spend 180 nights per year away from home, it is suddenly much easier to imagine using 11 free night certificates well.

Jim was firm that they get far more than the annual fee in value from each of the cards with free night certificates (other than the Aspire card). Since they spend so much time traveling, we accepted that the hotel cards made sense for Jim.

But here’s where we trimmed the fat from his credit card collection:

Southwest

Jim currently has a Companion Pass valid until 12/31/21 and he and his wife have alternated getting a companion pass via credit cards every 2 years for some time (See our Southwest Airlines Companion Pass Complete Guide for more on this benefit).

Greg told Jim that he should get rid of all four Southwest credit cards at next annual fee. I argued that it may be worth keeping the Southwest Priority card because they fly Southwest several times each year. At an annual fee of $149, the card offers a $75 Southwest Airlines credit, 7,500 Rapid Rewards points, and four A1-A15 boardings per year. The points will buy about $110 in airfare (give or take) and the $75 Southwest credit is pretty easily usable if you ever pay for your ticket and/or you pay for drinks on board. To me, that makes the card a pretty easy keeper even without the four A1-A15 boarding credits — though I’d be happy to take that four times per year (or really twice per year assuming you’re using it for two passengers each time). Given that Jim has the Companion Pass now and won’t need to think about new Southwest credit cards for a couple of years (at which point it’ll be his wife’s turn to go after the cards), it might be worth keeping the Priority Card that’s in his name despite its $149 annual fee. The rest of the Southwest cards don’t serve him a long-term purpose. (Saved: $397)

Chase Ink cards

Jim and his wife had 2 Ink Plus cards and one Ink Business Preferred card between them. He noted cell phone protection from the Ink Business Preferred but agreed that he probably didn’t value that at $95 per year.

The Ink Plus is an older card that is no longer available. It offers 5x on cable/Internet/cell phone and 5x at office supply stores on up to $50,000 per year in combined purchases (and 2x on gas). If that sounds familiar, that’s because it has the same earning structure as the Chase Ink Business Cash card. The only two differences are:

  • The Ink Business Cash has a limit of $25K in purchases per year that earn 5x
  • The Ink Business Cash does not have the ability to transfer Ultimate Rewards to partners. You need to first move points from an Ink Cash to an Ink Business Preferred, Sapphire Preferred, or Sapphire Reserve and then you can move them to partners.

In Jim’s case, he was not utilizing the $50K cap on 5x purchases on one of his Ink Plus cards — let alone two. Furthermore, it doesn’t sound like he spends much in the 3x bonus categories of the Ink Business Preferred.

Therefore, if he’s going to keep a Chase Sapphire Reserve (and we thought he should), then there is no sense in paying nearly $300 in annual fees on these Ink cards. Instead, we recommended he take his two Ink Plus cards and one Ink Business Preferred and:

  • Downgrade at least one to an Ink Business Cash (no annual fee)
  • Downgrade at least one to an Ink Business Unlimited (no annual fee)
  • Either close or downgrade the third Ink card to another Ink Cash

If he wants more than $25K in 5x bonus category spend, he could downgrade two cards to Ink Cashes to get two Ink Cash cards.

The Ink Business Unlimited would give him a 1.5x-everywhere card that could be used as a good “everywhere else” card given that he din’t have another card in his wallet to fit that need.

Again, moral of this story was to downgrade all three. (Saved: $285)

Marriott Bonvoy cards

Jim has 5 Marriott Bonvoy credit cards (a mix of Amex and Chase) and says that he uses all 5 free night certificates for better value than the cost of the annual fees each year. If they save him money over what he would have otherwise spent, it makes sense to keep all 5 cards.

Notably, Jim and his wife each have at least 1 business and 1 personal Bonvoy card.

While you can only get 15 nights of elite credit for having a personal Marriott card no matter how many personal cards you have and you can only get 15 nights of elite credit for having a business card no matter how many Bonvoy business credit cards you have, it is possible to have at least 1 personal card and 1 business card and get 30 nights of elite credit.

Since Jim has 1 business and 1 personal card in his name (and 3 total cards in his name), I recommended he may want to focus his hotel efforts on getting Marriott Platinum status. The credit card elite nights give him 30 nights toward status and the 3 free night certificates in his name can get him 3 nights closer. That leaves him needing just 17 nights to earn Platinum elite status (which ordinarily requires 50 nights). Platinum status will give him free breakfast / lounge access and 4pm checkout at Marriott properties (note that there are some properties, like Courtyard and AC Hotels, that only give a dining credit per person and others like Ritz-Carlton that don’t offer breakfast at all, but most Marriott properties give free breakfast to Platinum members). See our guide to Which Marriott elite benefits apply? to know what you get at each brand.

Jim is keeping all of the Bonvoy credit cards.

Hyatt

Jim and his wife have the older (no longer available) Hyatt credit cards with a $75 annual fee. He says he definitely gets good value out of the annual Cat 1-4 free night certificate, so he’s keeping these.

IHG

Jim and his wife each have the IHG Rewards Club Select card that is no longer available for new applicants ($49 annual fee) and as is the case with the other hotel cards, they use the free night certificates to good value (those certificates are each valid for 1 night at a property charging up to 40K points per night). I think the $49 card is a pretty easy keeper as even a relatively poor use of the free night certificate is likely to be pretty good.

Jim also has the $89 IHG Rewards Club Premier card. This one makes less sense to keep as it awards the same 40K free night certificate each year. At $89, that can still be a deal, but I’m less excited about it. Here’s why:

IHG frequently sells points for half a cent each. We’ve also seen many opportunities to buy points for less than half a cent each with the old points-and-cash trick. A 40K certificate is therefore worth, at best, $200 (the cost if you were buying points at half a cent each). Given that points don’t expire in a year (if you maintain activity) and they can also be used for multiple nights at cheaper properties, I would value the equivalent points more than a free night certificate that can only be used for 1 night and expires in a year. Therefore, the 40K certificate is worth less than $200. If you end up using it at a property that would have cost 30K points, you could have bought the (clearly more flexible) points for $150. That’s still not a bad value for $89, but if it’s going to also mean giving up elite benefits like the free breakfast you could have had at Hilton or Marriott so you can make use of your IHG free night before it expires, maybe the win dwindles a bit more. It’s not necessarily a bad deal, just not a definite home run.

Jim also mentioned the fact that the card comes with the IHG fourth night free benefit (on award bookings). That’s true — but the IHG Rewards Club Traveler card, which has no annual fee, also comes with the same fourth night free on award stays. If that benefit matters to Jim more than the additional free night certificate, he should consider the Traveler card and save a few bucks (Saved: $89).

Mileage Plus Explorer

Jim and his wife rarely fly anything other than Southwest domestically and rarely fly long-haul internationally, so they don’t need the free checked bags that come with the United Explorer card.

Rather than cancel this card, Greg and I recommended he downgrade to the United credit card that has no annual fee. This older card that isn’t available for new applications is still available for product changes. The card only earns 1 mile per $2 spent, so you won’t want to spend on it, and it doesn’t come with any other useful benefits except for one: the cardholder gets access to the same expanded award availability as other Chase United credit card holders. It’s worth keeping that just in case the expanded availability comes in handy since you can get it with no annual fee. (Saved: $95)

Chase Sapphire Reserves

Got to chop one of these!

Jim and his wife both had Chase Sapphire Reserve cards. That’s overkill in most instances. Since they are retired and are usually together when spending money on travel and dining (the 3x bonus categories on this card), there is no need for them to have two Sapphire Reserve cards.

Keep in mind that you can combine Ultimate Rewards points within your household, so as long as either Jim or his wife has a Sapphire Reserve, they can pool points from all of their cards that earn Ultimate Rewards onto that one Sapphire Reserve card in order to transfer to partners or use points at a vale of 1.5c each to book travel.

We recommended they downgrade one CSR to another Freedom card for an additional $1500 per quarter rotating 5x categories. If they did not downgrade an Ink card to the Ink Business Unlimited, the Freedom Unlimited would be another option here.

Note that while the CSR’s newly-increased $550 annual fee isn’t a fit for everyone, we determined that it likely is a fit for Jim and his wife since they cruise to and from Europe every year and spend about 6 months in hotels / Airbnbs / Vrbos / on cruises. They likely spend plenty to justify paying the difference in annual fees for the extra point per dollar of the CSR over the Chase Sapphire Preferred (that is to say that they will earn more in points than they will spend in net fee difference). (Saved: $550)

American Airlines credit cards

This was easy: since they don’t fly AA domestically and only occasionally maybe fly them internationally when they can’t find a cruise home from Europe, it just doesn’t make sense to keep any of the American Airlines credit cards. Perhaps some would choose to keep one for free checked bags, but even that probably isn’t useful enough here. Note that if you close the cards but have miles in your account, you’ll want to make a small purchase through the shopping portal each year to keep your miles alive with new activity.

I recommended that Jim consider product changing a Citi American Airlines credit card to the no-annual-fee Double Cash card to give them an additional “everywhere else” card. Short story: cancel the AA cards (Saved: $481)

Delta Gold

Simple recommendation here: cancel. They don’t use the benefits and it’s taking up an unnecessary Amex slot. Gone. (Saved: $95)

Amex Platinum

Amex Platinum Card

It didn’t make sense to me that Jim had a Platinum and no other cards that earn Membership Rewards since the Platinum isn’t very rewarding in most spend categories. He further reported that they don’t have lounges at the airports they frequent and haven’t fully used the airline credits every year. This card is too expensive to justify if you aren’t squeezing out every bit of annual benefit. Our recommendation was to cancel (though Jim will want to first transfer out any existing Membership Rewards points or consider opening the Blue Business Plus, which has no annual fee and would keep his points alive / preserve the ability to transfer to partners. (Saved: $550)

Hilton Aspire

Despite the fact that I’ve often said that this is the one no-brainer ultra-premium card, our advice was ultimately that Jim should probably downgrade to the Hilton Surpass, which carries a $95 annual fee. That’s because Jim said he didn’t use up the entire airline credit, doesn’t usually use the annual Hilton resort credit because they don’t stay at Hilton resorts, and the benefit he valued most was Diamond status for free breakfast, lounge access, and room upgrades.

Since Hilton Gold gives you breakfast at Hilton properties and will sometimes get you an upgrade to a club lounge room and since Jim isn’t really maximizing the other benefits on this card, it makes more sense to downgrade to the Hilton Surpass. Note that if Jim had never had the Surpass before, he’d be better off opening it as a new application in order to earn the welcome bonus — but since he isn’t eligible for the welcome bonus, the downgrade makes sense. (Saved: $355)

Radisson Rewards card

Jim also has a Radisson card with a $75 annual fee. I mostly stayed quiet on this one as Greg talked it through. It sounds like they use the anniversary points from this card for more than $75 in value, so I guess it’s a keeper. I have the $75 Radisson card and think it can be a fit for some, but I may have questioned them harder on this in hindsight. Still, we ultimately said to go ahead and keep it.

The unfiltered conversation

The above re-hashes what we spoke about with Jim, but if you’d like to actually hear it all play out, here is the unedited full discussion. Note that Jim under-estimated his current annual fees a bit since some had likely gone up since he last wrote out his list, so you’ll hear him reference a slightly smaller total cost.

Bottom line / what we can learn

Greg and I wanted to take an opportunity to do a consultation with a reader to answer their questions about points and miles and Jim came at us with a need for an immediate intervention: he was paying far too much in annual fees. Assuming he takes our recommendations, Jim will still be paying a pretty heft sum in total annual fees (just over $1600 per year), but that is a far cry from the $4500+ where we began. Given that he and his wife travel for about 6 months per year, that sum becomes more reasonable since it will save them actual dollars and cents over paid nights in many cases.

Given the current environment and severely reduced travel, many of us could stand to take a look at our credit card portfolios and consider which cards can be downgraded or cut from the pack. In many cases, it’s relatively easy to bring those cards back via future upgrades or new applications, so it may be time to have an intervention of your own.

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