Credit Cards

Cancelling Credit Cards

Churning credit cards is almost an art at times. Knowing when to get what card and when to drop cards and in what situation can be a difficult thing to keep track of. None the less, knowing when to drop a credit card very important.



Right now I'm coming up on a credit card renewal with Amex that will trigger a cancellation and I'd also like to remove a card from Citi as well. In both these cases, I've grabbed other cards that do exactly the same thing with better perks. When you have cards that have duplicate features, my view is that they are completely superfluous, so why keep it around and continue to see yearly fee charges.

How to go about a cancellation.

Before you outright cancel the card, ask if the agent can move your credit allocation to another card you're going to keep active. Unfortunately this doesn't always work, in my case Amex says my account has not been open long enough with them to justify a credit move. While this case isn't ideal, I can't pay $95 for a card that will never get used, so I will have to take a credit hit on this one. Amex is an card company since they do not allow you to have more than 4 credit cards open with them at any one time. If I want to take advantage of other credit card offers from Amex, I need to drop at least one. This duplicate card seems the best option since my Delta Reserve card will cover the same benefits as the Delta Gold card.

In Citi's case, I want to cancel my AAdvantage Platinum card since I now have the Executive card. Citi is a little more flexible in the total cards you can have open with them, again I'd rather just move the credit off of the card and close it, but there is also the option of downgrading the card to a no fee card. I'm a Costco member right now, so that might be one option... honestly Costco isn't a huge go to store for us, but the gas prices are well worth the membership. So that's an option if the credit is not able to be moved.

The key here with cancellations is to try to keep as much total credit as possible. Don't give up credit unless you have to, and if you have to, don't hesitate to let it go if it'll be in your best interest in the end.

Back to Basics: Credit Card Spending

Opening credit cards isn't the only way to gain points with credit cards, spending on them can pay out very well too, knowing how to do that is a fine art. Knowing how to pay on what card for what purchase can help bring in lots of points and be just as important as credit card signups. 



Many of the best points earning cards have bonus categories. No one card covers all bonus categories that same, so knowing which one to use in which situation will help maximize your earnings. Also, being able to diversify which company you make purchases on will let you earn points with many different companies. Diversification helps protect you from what seems to be a non-stop devaluing of loyalty programs.

Lets just look at how I tend to spend as an example. In my mind, real life examples give the best learning tools. 

Lets say I have a busy day planned and need to do the following:

  • Fill my car with gas
  • Meet my fiance for lunch
  • Go grocery shopping
  • Book a vacation for us
  • Buy some cat litter

Buying Gas

I start my day by making my way to the gas station. Once there, I need to decide how to pay for the gas. Normally I spend $25-$30 for gas, lets just use $30 as an example. If you pick the wrong card, you get 30 points, choosing the correct card grabs you 90 points. There are certain cards that gain you bonuses on gas purchases, in this case I use my Citi ThankYou Premier card. This card gives 3x points for any gas purchases. If you don't have a Citi Premier card, find another card with a good gas bonus like the Amex Everday Preferred with 2x bonus on gas purchases.

Using cards like these isn't the end all be all though, my normal gas purchases are actually made on my Sapphire Reserve card.... why would I give up the points? There is always a consideration to be made with all things. If using a different card saves me money, is it worth it to pay more to gain extra points.

This is a hard question to answer, as an example my gas purchases work well. I have a Costco membership, this consistently saves me 13 cents per gallon on any gas purchase... but Costco only takes Visa cards. Citi uses Mastercard for the most part, so the dilemma is, do i save the 13 cents per gallon and lose the points, or pay more and gain more points. It's not an easy question to answer, but in many cases the saving of money should always take precedence. There are ways to figure the value of points, but they are subjective and up to you to use. Some websites can provide you their view on the actual value of points if you want to run the numbers. in this case I ran the numbers and the money savings is far more than the value of the points gained... so I purchase on a non-ideal card to save money.

Lunch Date

Next on my to do list was to go out to lunch with my fiance. We meet at a favorite restaurant for lunch and have something to eat. Now it's time to pay, what card to use? Well once again, we look for a bonus category. Right now I use the Sapphire Reserve card for this purchase, the newly released Sapphire Reserve card has 3x points on all dining purchases. Pulling out this card will triple the amount of points you earn per dollar versus another non-bonus card. Don't want to pay for an expensive card like the Sapphire Reserve, then there are other cards with lower bonuses for restaurants that will still give you a bump in points for this purchase.



Groceries

After lunch I go grab groceries at my local supermarket. Once everything is in the cart and I head to checkout, it's once again time to choose the correct card. In this case I reach for the Amex Everyday Preferred card because it has a fantastic bonus on groceries, 3x points normally. It does limit you to a maximum of $6000 on groceries a year, then the bonus drops back to 1x point. However, the Amex card has a trick up it's sleeve. if you make 30 purchases a month on this card, you get an additional 1.5x bonus to all points earned. If you hit that 30 purchases, your grocery points jump to 4.5 points per dollar spent. This gem of a card has been the single best earning card for me bar none.

Trip Planning

Trip planning tends to be a little more complicated. Many of these cards offer travel bonuses, and knowing which one to use in which case can get really convoluted, but if you stick with it, it will pay off in spades. 

Starting with airfare, this can be straight forward, there are many cards that provide 3x points on travel, pick any of them for flights, whichever you want to send your points to. Do keep in mind that many cards also give a once a year refund of $200-$300 on flights, so make sure to use those up and not let free money go to waste.

Next is the hotel... yep this gets a bit more complicated. If I'm staying for 3 days or less, it's back to the same situation as the flight, choose any card that gives 3x bonus for travel. If I stay 4 nights or more, then I use the Citi Prestige card since it refunds me the 4th night. If you're staying 8 nights, you can grab the Citi Prestige 4th night free twice, but they have to be 2 different stays, so you'll have to book 2 different stays, usually at different hotels. In my opinion getting 2 nights free is well worth a hotel switch in the middle.

Last is a car rental, this is straight forward, use the Sapphire Reserve card or if you don't have it use the Sapphire Preferred card. I use these cards no matter what the bonus category and that is for one simple reason, the card has primary car insurance. Other cards act as car insurance but only after your normal car insurance is used, which means you may get rate bumps on your regular car insurance if they find you at fault in any way. Using the Sapphire family cards means that you never report your accident to your normal car insurance, so they never have the chance to bump your rates. The Chase card is your primary car insurance for the rental car.

Cat Litter

Grabbing some cat litter is my last stop. no there is no bonus category for cat litter. I threw this one in here to act as an everyday purchase. Most of your daily purchasing is going to be a non-bonus category purchase. Walgreens to Target, most of these stores aren't covered by a bonus category, so you need a good everyday spender. In my case that is once again the Amex Everyday Preferred. The reason for this is that once you hit the 30 purchases a month, you get that bonus of 1.5x bonus on all your points. Most cards only offer 1x points for everday purchases, this card once you reach that 30 purchase threashold gives you 1.5x points on these purchases, not to mention boosting your grocery and gas purchases as well. Like I said before, this card brings in more points for me on a monthly basis than any other card... by a long shot. I've already doubled the sign up bonus of this card in a few months. This is my go to card, get it, love it, use it!

So that's the basics. There is of course a whole host of things that require your to adapt and adjust, but these basics will help you chose how to purchase and when.

Back to Basics: Opening Credit Cards

In order to take advantage of business and first class international seats, you have to build up some pretty large stores of miles and points to make use of. There are a number of ways to do so, but none are quite as lucrative as credit cards.



Opening and closing credit cards can grab you huge swaths of points and miles all at once. This is a strategy that must be planned out, and executed with care though. Losing control of your spending on credit cards can not only put you in debt, but leave you paying massive interest rates that immediately negate the points you earned in the first place. The aim is to pay off your card every month, and never ever see an interest charge or any other type of charge.

When I first started doing this last year, it was easy to make work. There were some rules that had been put in place by credit card companies as they try to make it harder for people like us to move credit cards around in our wallets like a mad man. Opening and closing cards for points and miles is referred to as credit card churning. Credit card companies in the last few months have begun to implement even further restrictions on opening cards.

Chase has a 5/24 rule, Citi has a new rule on opening types of cards, and Amex has the famous once per lifetime bonus restriction. If you know these rules though, you can work around them and change your habits to better work with credit cards and gain many points.

Keeping an eye on your credit is very important as well. Credit bureaus will have you believe that opening many cards will negatively impact your credit. This is partly true, but the additional credit that is opened up for you on the new card is weighted much higher than the negative impact of the credit lookup. This means that getting credit from a new card will in most cases increase your credit score, not drop it. Keep that balance at $0 though, otherwise it will negatively impact you with interest charges, and drop your credit rating. Use services like Credit Karma to track your credit score for free and keep on top of any negative changes.

This is also a game to be played by those who already have pretty good credit. Getting approved for these cards in many cases requires good credit. 

Always track everything. Nothing got me tracking my spending quite like jumping into this churning hobby. Track the dates your were approved so you know when to cancel if you don't want to pay the yearly fees, or when the yearly fee is due if you want to keep the card. Track the money spent on each card. Track if this card can be reapplied for and when. These are very important things to remember in churning. All of this will lead to large points/miles stores that will allow you to take some amazing trips for next to nothing out of pocket.

Is Chase Worth Our Business?

It looks like Chase has fully implemented their 5/24 rule across the board and for me, this means Chase may be dead. The 5/24 rule for those unaware, means that if you have opened more than 5 credit cards in the last 24 months, Chase will no longer allow you to open a new card with them. 



Your immediate reaction may be that, "I haven't opened 5 cards in the last 24 months with Chase, I'm good to go..." I thought that too, right up until my last application was denied because of my credit card history. My Chase account only has 4 cards... so where are they looking? They are looking at all credit cards everywhere, they are pulling it from your credit report. That means no 100,000 point offer for me, I can't get the card period unless I upgrade the current Chase Sapphire Preferred to the Reserve version.  

While I understand why they did this, Chase is one of those companies that has a massive share of the travel card market, for whatever reason. I think that Chase ranks the lowest of Citi, Amex and Chase, I'd use Citi or Amex before using a Chase card... I just don't like Chase. Their treatment of phone payment systems like Android Pay has been crazy and I've been turned off to them since then. Their point structure has been terrible up until the reserve card, which is why I'm always confused by people loving the Sapphire card so much, the points just aren't great.  

This also means I shouldn't close any current Chase cards, because I may never be able to open them again. While Chase has every right to handle their business how they want, so do I. Over the past 6+ months, Chase cards have become almost completely unused for me. The Sapphire card takes a roll as my restaurant card only and the occasional other pruchase when another card isn't accepted. Chase's only really great perk on the Sapphire card that can't be found elsewhere is their fantastic rental car insurance. 

So is Chase worth our business anymore? Well that is a mixed answer from me. Yes and No. Yes in the case where I want their Ultimate Rewards points, but outside of that, I'd almost have to completely stop opening credit cards to use Chase bonus points. That is unlikely to happen when there are so many options available to me. So on a certain level, Chase cards will essentially be ignored. 

So why does Chase hate credit card churners? There are a few simple reasons for that. First off, we tend to pay our credit cards off, no interest can be charged against us, no fees can be levied, we tend to hold balances at zero, because otherwise the rewards aren't worth it. Also, points and miles are our goals, so we tend to jump around alot, meaning that credit card companies have a difficult time getting us to regularly spend on a card where they can then collect transaction fees. We are probably the least ideal client for them to have... but we do spend on their card, we do provide income for them... so is it a good idea for Chaser to kill a relationship with customers? That's hard too say at this point. 

Chase is a bit contradictory here though. Another points blog, "The Points Guy" was used by Chase to announce the new Chase Sapphire Reserve card. I find this to be an incredibly backhanded move by Chase, and one that I dislike them for immensly. This may be a case of the PR department and policy department not knowing what each other is doing. However, to advertise a credit card to an audience that will likely not qualify under your Chase's new policy is not only a horrible move, but it also increase the chances of having people initiate a hard pull on their credit report and then being denied a credit line for it. It's boarderline unethical... but in my eyes this is par for the course on Chase. 

In the end, I'll use Chase only where it really benefits me, outside of that, Chase is going to take an even deeper backseat for me than they had before. 

  

Can You Get Paid For Flight Delays?

Many of us have faced flight delays, even if we're only casual travelers. It's one of those realities of the world that is both annoying but understandable at the same time. Airlines often offer trip protection every time you buy a flight... I'm pretty used to seeing this during the purchase process. This protection often is a small cost per ticket, but if you fly as much as I do, it would add up really fast. So, is there a way to protect ourselves, or even get paid back for delays as short as 3 hours?



The answer to that question is yes. You actually might have that protection and not even know it. Many travel credit cards provide trip protection now. Each card issuer has different rules, Citi is by far the most generous when it comes to length of delay. If your plane is delayed 3 hours or more, you are covered. Any charges after that delay are reimbursable under the trip protection policy. If you have to buy an extra meal, or get a hotel overnight, all of this is covered after a very short time frame. 

Other cards offer similar protections but the time frame often varies quite a lot. Chase has the worst policy... because it's Chase. Their trip protection doesn't kick in unless the flight is delayed 12 hours or more. Amex lands in the middle at 4 hours, but requires an optional $9.95 fee to add the trip protection.

Each card also has a maximum reimbursement for each incident. Citi is $500, same with Chase, and Amex is $250 but Amex is a per person reimbursement. 

All that is required is that at least part of the ticket be purchased with your credit card. I say part because Citi and Chase offer this protection on reward flights as well, as long as the fees and taxes you pay on award trips is paid with your credit card. Amex doesn't cover award flights, so they aren't worth mentioning here.

If I was going to choose one card here, it has to be the Citi Prestige card, it just protects me better than anything else. Buy your tickets on the Prestige card and your next delay might mean lunch is on Citi.