A few weeks ago, I wrote about the Chase 5/24 rule, talking about the fact that Chase is cracking down on people that have at least 5 new accounts opened in the past 24 months. The evidence now seems to point that if you’ve applied for 5 new accounts (from ANY bank!) in the past 24 months, you are not going to be approved for a Chase Sapphire Preferred or Chase Freedom card
(SEE ALSO: Current credit card signup rules and best practices)
Susan from the excellent FPT Giftbox blog left a comment on that post that asked:
I got Chase BA (100k) last month but Chase Ink Cash was denied. I already have the Chase Ink Plus and maxed out my 50k office supply store limit, so really wanted the Ink Cash. Bummed. I also have Chase Sapphire, Freedom, IHG, and Hyatt. My United MPE application got denied and that was the second time I got denied for a credit card application (first was Club Carlson, but US Bank has always been hard on people that sign up for lots of credit cards). My annual fee for the Sapphire is coming up soon so I have to decide if I want to cancel or keep.
Dan, which cards with annual fees do you keep?
Which cards with annual fees do you keep?
I thought it was an interesting question and worth a separate post to talk about cards with annual fees. I think about new credit cards as providing benefits in 3 different ways
- Cards that have a good signup bonus
- Cards that provide an ongoing benefit, such as a good category bonus, or other perks
- Cards that have an anniversary bonus, such as free nights
Cards that have a good signup bonus
I think that just about every card that offers a signup bonus is worth signing up for at some point – you can see how my wife and I just signed up for 7 new cards as part of our November 2015 signup. Now, I say this every time, but DO NOT SIGN UP FOR A CREDIT CARD JUST BECAUSE SOME GUY ON THE INTERNET SAID HE DID! Take things slow and only go with what you feel comfortable with.
As we read in my Beginner’s Guide to travel hacking, generally speaking the small temporary hit to your credit score is more than compensated with the other benefits of signing up for the new card (not to mention the signup bonus)
(SEE ALSO: How do Credit Card signups affect your credit? – Part 1)
(SEE ALSO: How do Credit Card signups affect your credit? – Part 2)
Most credit cards that have an annual fee have it waived for the first year, and it is rare (but not unheard of) that I personally will sign up for a card whose annual fee is not waived
Cards with a great ongoing benefit
The first set of cards that might be worth paying an annual fee are those that have an ongoing benefit that makes it worth paying. Here are a few examples
- Chase Sapphire Preferred and Chase Ink cards allow you to transfer your Chase Ultimate Rewards to transfer partners, instead of just redeeming them for cash through the UR travel portal.
- The Chase Ink card also gives 5x at office supply cards, which is great for when they have deals on Visa gift cards as well as for reselling opportunities
- Many airline cards give benefits like some elite status, free checked bags, a companion fare or increased award space, which could be useful depending on your travel patterns
Generally speaking, there aren’t many cards in this category that I personally think are worth paying the annual fee on. Even on those, we’ll generally try to call the reconsideration line to get a statement credit or other bonus offer in exchange for the fee. We do keep the Chase Ink card and that’s just about it.
Cards with an anniversary bonus
Another type of card that can be worth paying the annual fee is one that gives a bonus on the anniversary.
- The most common example of this is the Chase IHG Rewards card, which gives a free hotel night at ANY IHG hotel on your anniversary, all for paying the $49 fee. So you could use it at, say, the Intercontinental Bora Bora (below)
- Most hotel chains have a card that offers similar benefits, though most of the other ones have limitations (like only Category 1-5, for example)
- The Club Carlson cards offer 40,000 bonus points on your anniversary in exchange for your $60 or $75 annual fee
- Many of the “premier” cards that have really big annual fees offer large annual airline credits, which can help offset the fee, again, depending on your travel patterns.
- As I mentioned before, if you call in and tell them that you don’t want to pay the annual fee, you can often get either the fee waived, a statement credit, or bonus miles that will offset the fee.
If you have questions about credit cards, shoot me an email at dan at pointswithacrew dot com – I’m happy to help. If you do want to support the site, I do receive a commission if you sign up for a card through my affiliate credit card links.
What about you? When have you found it useful to pay the annual fee on a card? Did I miss any obvious examples? Leave a note in the comments!
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I’m planning on keeping the Prestige if it stays at $350… With the annual airline fee credit, 4th night free benefit, and priority pass access it comes out on top. Keeping the Amex SPG as well because I get more in Amex Sync offer credits with it every year than the annual fee, and I love earning starpoints (though that’ll probably only be possible for another year). I also keep my Citi AA card for the 10% rebate (though almost every year I can get the annual fee waived). Also keep IHG and Hyatt for the annual night included with the fee — I get 2-3x value when redeeming those nights. And lastly, I plan on keeping my Ink Bold card and attempting to get a fee waiver/statement credit as I love earning UR points with it. Probably dropping both my Club Carlson cards…because club carlson’s program is now garbage.
That’s a good point – most Amex cards (especially if you have a bunch of authorized users) can more than pay for their annual fee in Amex Offers savings!
The Ink Plus isn’t worth the annual fee if you have the Ink Cash and the Sapphire Preferred. That combination gives you the same 5X categories as the Ink Plus, lets you transfer UR points to partner programs, and gives you primary liability insurance on car rentals.
I only pay the annual fee on the CSP and IHG cards every year. I may pay the fee on the Citi Prestige when it comes up for renewal.
Hyatt, Marriott, IHG – for anniversary nights; Southwest – lower annual fee version because of bags fly free and their “get away” rates – twice I flew RT for 12000; American Ex Preferred 6% back on groceries, 3% back on gas and department stores; I still have Barclay Arrival but I am getting rid of it – their “travel” category is shrinking and 10% back in points went down to 5% – City Double gives 2% back in cash and no annual fee, it is a better choice
Hey Dan! Just saw this post! I ended up canceling my Chase Sapphire because I can still transfer UR to partners with the Chase In Plus. So far, I’ve kept the Barclay Arrival, AMEX SPG, and AMEX Blue Cash Preferred. I’ll keep the Chase IHG when the annual fee comes around. Will also keep the BOA Alaska for the companion pass since I can “sell” them.
Susan, how do you “sell” your companion pass?? I have one in my Alaska account that I won’t be using, would like to sell it!
Kerri, I use the companion pass to book flights for other people. I book using my BOA and they pay me back for the companion pass and the annual fee. It’s still cheaper for them than paying full fare on both tickets and I get to earn extra Alaska miles.
I live in the Bay Area so the most popular route is SF/SJ to Hawaii. I have 5 BOA cards now (just acquired two more recently) just for those companion passes.