More rambling about credit cards – Independence Day edition (I guess)

When I started this blog, part of the reason was to think out loud a little bit about my credit card strategy and maybe even engage in a dialog with the intrepid few who read along. Now that the year is half over and I’m just about done with a bunch of minimum spending requirements, I have been thinking about my overall strategy and which cards I should keep/cancel. (Also, as an aside, are you guys familiar with the band Pile? I’m listening to the album You’re Better than This while I write this post, and it’s fantastic.)

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Instead of a picture of all my credit cards fanned out, here’s a capybara with a bird on its head.

I’m starting to get concerned that I’m too heavily invested in Amex right now, and that I need to focus on diversifying a little bit, even if my total return isn’t as high as it would be if I kept the focus on Membership Rewards. How did we get here? First, between cards like the Everyday Preferred and the Blue for Business, Amex points have become really easy to earn. Add to that some very generous referral bonuses, elevated sign-up bonuses, and a steady crop of Amex offers that earn bonus points instead of cash back, and it’s easy to earn thousands of points every month. Some offers (like earning an extra point on all transactions at Whole Foods for the rest of the year) are just begging to be capped, but god love ’em, they’re leaving it open.

Here’s my worry with Amex: I’m not super eager to earn and burn these points, because the biggest windfall opportunities (sign-up bonuses) are mostly closed to me at this point. There’s the Charles Schwab Platinum card that I plan to open later this year for 60k, but after that I’ve done pretty much all there is to do. I’ll continue to pull in probably 50-75k or so a year between normal spending and special promotions, but that’s not enough for two round-trip long haul business class tickets. I wouldn’t mind sitting on a big stash of points and spending them judiciously, but I’m worried the Membership Rewards program is going to take a hit with Aeroplan goes away. Right now Aeroplan is my go-to for awards, but they won’t be around in a few years, and if Air Canada’s in-house program doesn’t align with Amex, that’s a major devaluation. Of course ANA will still be there, but that program isn’t nearly as lucrative (or use friendly). Oh, and Delta… if Delta even bothers to have a loyalty program in a few years. (Plus, I already have way too many Delta miles.)

I’d never be worried about Chase points dying on the vine, but I’d hate to have a couple hundred thousand Amex points sitting around indefinitely because there weren’t any good redemptions anymore. I realize this is highly speculative and also quite a long ways off, but it’s never a good idea to be too heavily biased toward any one program, and I think Amex occupies too big a percentage of my overall point total. I also made a stupid decision when I booked my most recent flights and spread the 125,000-point transfer to Flying Blue across all three programs. This made sense to do for Citi, since I knew I was going to shut down my Prestige card, so it was a good way to clear out the points I had left. However, I absolutely should have pulled the rest from Amex, since I still would have had more Amex points than Chase even after debiting 85,000. There’s no way I should have pulled 40,000 Chase points for this, given that there will be no Ultimate Rewards sign up bonuses in my future (unless Chase makes a major change).

Last year, I was swimming in Chase points, but I spent them pretty quickly – a few Hyatt category 7 stays here, a couple Ultimate Rewards redemptions at 1.5 cents per point there, and a first class ticket for Justine to fly home from New Zealand… and voila, I just spent 150,000 points. Yikes. So, here’s what I’m thinking:

  • Current strategy: Sapphire Reserve (or Freedom this quarter) on restaurants; Amex Everyday Preferred on groceries and gas plus little transactions to get to 30; Amex Platinum or Sapphire Reserve for travel; Blue for Business everywhere else.

As you can see, this biases pretty heavily toward Membership Rewards, with the only points to Chase coming through restaurants or non-airline travel.

  • New strategy: Basically keep it the same, but substitute the Freedom Unlimited for the Blue for Business. Also maybe start using the Sapphire Reserve on airfare? I don’t want to give up 2 points per dollar to Amex, but again, this is about doing what I can to bolster my Chase balance (plus I’d get better trip protection). I don’t spend that much on airfare anyway.

One other opportunity I thought I would have was earning 5x Chase points on Amazon year-round by buying gift cards from Office Max with the Ink Cash card. Unfortunately, every office supply store I’ve tried to do this at has refused credit cards as a payment method for gift cards. Jeez, maybe I need to suck it up and learn how to manufacture spending already…

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Here’s a capybara with two monkeys on it.

Other stuff:

  • In general, my advice to people is to open cards even if you don’t have a use for the points. I mean, don’t go nuts, but I think it’s okay to sit on point if the offers you get are uncommonly good and unlikely to be repeated. Here’s a counterargument, though… last summer Delta offered their HIGHEST EVER BONUSES on the Gold and Platinum Amex cards, and I opened one of each for 50k and 60k respectively. I ended up sitting on the points, though, and now Delta has devalued twice. That’s always the risk, and as I have argued before, the points are worth marginally less, but they certainly aren’t worthless. What has changed is that this summer, Delta offered the HIGHEST EVER BONUSES on these cards again, this time upping them by 10k to 60k and 70k. It makes sense – 130,000 points are worth the same now as 110,000 points were worth last summer. The problem is that they’re Amex cards, so I’ll never get either of the bonuses again. My takeaway from this is to be more discerning in what “unlikely to be repeated” means. As I add years of experience, this will get easier, but, for instance, what if Amex tries to entice a bunch of Citi Hilton holdouts with a 150,000 offer on the Surpass card in a few months? I’ll be pretty glad that I didn’t get the Surpass last month, even though it was offering it’s HIGHEST EVER BONUS.
  • The runaround I got from Hilton customer service notwithstanding, I’m enjoying the results of my Hilton play. I was able to grab a room at the Waldorf Amsterdam for 85,000 points, which was almost exactly how many I earned on my Amex Hilton last month. With the two nights I got from Citi, that gets me three nights for $4500 in spending (and two hard inquiries), which is what I had originally hoped for. Plus, I took advantage of the Hilton promotion to refer the card to my wife and a coworker, so by the time that’s all done, I’ll have around 125,000 points left to enjoy. I’m very interested in what happens once Amex becomes the exclusive issuer for Hilton, including whether they introduce a card to compete with Chase’s Ritz Carlton card. I may be running out of opportunities for Membership Rewards points, but between my wife and I, it shouldn’t be too tough to get another couple hundred thousand Hilton points once we have a use in mind.
  • Much to my surprise, I finished my first six months with the Blue for Business card without maxing out the restaurant bonus (which was 10x per dollar for the first $2000 over the first six months). This was mostly due to Amex not counting meal delivery services as part of the bonus, since we almost never go to actual restaurants anymore. Still, if you had told me in December that I wouldn’t spend $2000 in restaurants over the next six months, I’d have told you that I would spend $2000 in restaurants over the next six months. I ended up getting around 15,000 points through the promotion, and since the card has no annual fee, I didn’t lose anything by not maxing it out.
  • City National Bank continues to be hilarious. They sent me big poster tube in the mail the other day that only contained a flyer about getting a mortgage. Maybe they did it so it would stand out in the mail? Also, I got a call yesterday from someone offering to help me downgrade my Crystal card, which I did eight months ago.
  • I didn’t ultimately take advantage of the Amex offer for 20,000 points on $200 spend with Intermedia. Basically, it came down to the fact that I don’t have tons of extra money right now, and I have tons of Amex points. Plus, if I really wanted to buy Amex points, I’d just get Justine a Platinum card – between the normal bonus and the referral, that would be 75,000 points for $550 in spend (less if you net out the airline/Uber credits).
  • Finally, Amex was stone-faced when I tried to get a retention bonus on the Mercedes Benz Platinum card. I called three times, and every time the rep told me the new benefits were so great that I should be begging them to let me keep the card. The best I could get was one guy offering to use 47,500 points to pay for the annual fee. On the one hand, I should keep the card open, since I still only pay $475 for it (as opposed to $550 on new cards). On the other hand, I got an unexpected tax bill for around $475, so I think I’m going to close it and use the credit to pay the tax bill. I still have my other Platinum card, and I’ll have until the end of October to cancel that one and get the fee back, and which time I’ll be ready for the Schwab Platinum (and presumably I’ll have put money aside each month between now and then to pay for the fee).
  • Oh god, this is almost 2000 words. Does anyone really read this far?

6 thoughts on “More rambling about credit cards – Independence Day edition (I guess)”

  1. I’m not fond of the new strategy. The Blue for Business is 2.3x MR for the first 12 mos — and 1.3x MR afterwards. Shifting unbonused spend to the Freedom Unlimited, which will (for the foreseeable future) always earn 1.5x UR represents an enormous opportunity cost. Even if you valued UR and diversification at 1.533 the value of MR (the breakeven point for valuation), that opportunity cost is a killer. (Even with the disparity in your current balances.) (Also that would be crazy :P)

    Take this illustrative example, for instance. Using the Sapphire Reserve’s travel portal converts 1.5x UR into 2.25% while using MR to pay for charges converts 2.3x MR into 1.38% (with a minimum bound of about 1.35% which can occur due to the discrepancy between MR being used at 0.6¢ and not evenly dividing a charge). Those totals give UR a 1.630x to 1.667x advantage over MR. In other words, you’d have to literally waste your MR for the valuations to remotely.

    (Also, you should definitely get into manufactured spending!)

    Liked by 1 person

    1. This is good to consider. Like most of my “thinking out loud” posts, I’m not married to anything in there, so I appreciate the counterargument. For me it comes down to how much I need one or the other rather than the actual rate of return. I find myself having an easier time using Chase points than Amex, which is why I want more of them. Is that worth the opportunity cost you cited? Not sure. And anyway, I’m still working through some minimum spends right now (and just added an Amex green card with the 25k incognito offer yesterday), so I have plenty of time to rethink.

      Like

    2. I’m with sirtheta on this one. Even if one does not re-up with Amex Business Platinum for the 35% rebate on airfares, each time you use Blue for Business it is 2.3 cents back for airfare. With Amex Business Plat, and even allowing for breakage and the coming devaluation, it’s still over 3 cents back for airfare. Given that one can if necessary do other things with MR points, it still seems like the non-bonus-spend winner.

      Kind of ironic, no? What got me and I’m sure others here was you getting onto this parlay in the first place.

      Like

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