I enjoy the benefits of travel rewards credit cards but I do not like to pay hefty annual fees.
Many premium rewards credit cards waive the annual fee for the first year.
But when your one-year anniversary rolls around, the fee will post on your credit card statement.
Call the Bank to Request a Fee Waiver on Your Credit Card
Here’s a hint:
Don’t close your credit card account when the annual fee comes due without calling your bank first.
Ask the bank representative what incentives they can offer you to keep your account open.
Ask what other offers may be available so you can weigh all the options.
The banks spend a lot of money to recruit you as a customer. They advertise on TV, in magazines, and on websites. They send out multiple mailers. They pay affiliate commissions. They offer refer-a-friend bonuses. Moreover, many banks offer generous sign-up bonuses worth $400-500 or more.
The banks would lose all their “investment” in you if you close your account after the first year.
Ask and Ask Again
You might be surprised how generous some banks are and how anxious they are to keep you as a customer.
Before or after your annual fee posts, you can call the issuing bank and find out whether they are willing to waive the annual fee or offer points or other incentives for you to keep the account open. Some banks have a grace period of 30 or 60 days after the annual fee posts during which you can cancel the card without paying the fee. Check with your bank on their policy.
I had a number of anniversaries coming up on my cards this spring. I called the banks, and here are the results. These are just a few data points. Everyone’s credit and spending record are different and everyone may have different offers available.
Chase Bank Offers $95 Statement Credit on Ink Plus Business Card
I have had the Chase Ink Plus business credit card for just one year. Before the annual fee posted, I called to inquire about retention bonuses. Right off the bat I was offered a credit of $95 on my account to offset the $95 annual fee. I accepted this offer. I am happy to keep this credit card open because I find the five times Ultimate Rewards points it offers for office supply purchases to be quite valuable.
Chase Southwest Rapid Rewards Business Credit Card: No Soap Radio
Another card I had with Chase was the Southwest Rapid Rewards Business Credit Card. This card has an annual fee of $69 which comes with a 3,000 mile bonus. In past years, Chase has offered me an extra 3,000 miles to keep this card open. This year, I had no luck with an increased offer, and I closed the account.
Meanwhile, I will continue earning Chase Ultimate Reward points with the Ink Plus card, which can be transferred to Southwest Rapid Rewards points.
Barclays Bank Cancels the Fee on the AAdvantage Aviator Red Credit Card
When US Air merged with American Airlines, my Barclays US Air credit card became an American Airlines AAdvantage Aviator Red Card. When I called Barclay’s, I was told that there would be no annual fee for the first year of the Aviator Red card, because it was a new product. However, an $89 annual fee did post on my statement. I called the bank again and they rescinded the fee.
I will keep the card open for the coming year, because it offers a ten percent rebate on flights booked with miles, discounted award tickets, and free checked bags for myself and my family.
Citibank American Airlines Card Offers 3,000 Miles
I have both the business and personal Citibank American Airlines Platinum Select cards. I called Citibank to inquire about the grace period on my business Citibank American Airlines Platinum Select World MasterCard. While I was at it, I asked if they had any special offers available. Citibank offered me 3,000 miles just for asking!
When the annual fee came due, I called again but there were no retention offers available so I cancelled my business card. I already have another American Airlines business credit card (see above) and did not see the need to keep two cards open.
A few weeks later I called Citibank to inquire about special offers for my personal American Airlines Platinum Select World MasterCard. This time I was offered 3,000 miles, but I must spend $500 on the card within the next three months in order to receive the bonus. They had several other offers available, but this seemed the least troublesome. I will inquire about retention offers when the annual fee comes due.
Amex SPG Credit Card
Amex recently announced that it was raising the annual fee on its Starwood Preferred Guest (SPG) credit cards from $65 a year to $95 a year. My annual fee comes due in August, and I was told that the increased fee will not take effect at that time. Even at $65 a year, I am hard pressed to justify paying an annual fee to Amex.
In years past, I have never gotten more than 1,000 SPG points for calling in. When the annual fee posts I will decide what to do depending on which special offers are available.
* * *
Hey, two out of three banks ain’t bad! If you would like to share your experience in the comments below, it will help other readers who are seeking fee waivers or other bonus offers.
I don’t really get the bloggers who claim to earn gazillions of frequent flyer miles by shopping via online shopping portals.
Sure I try to rack up a few extra points when shopping online, but more often than not I find that bonus offers are not honored, probably due to some fault of my own.
For instance, if you enter a coupon code found elsewhere your bonus points will not be credited. If you already have items waiting in your shopping cart, you might not earn the extra points. If sales post after the promotion closes, you may be out of luck.
CITIbank Apologizes for Shopping Portal Payout Error
The AAdvantage shopping portal was offering a holiday promo some months back. I never received the bonus points, but past experience has taught me that it might not be worth the effort to try to straighten it out.
Today I received a surprising email from Citibank. Here’s what it said:
We didn’t give you the correct incentive
You recently enrolled in an offer to earn 3X AAdvantage® miles for eligible online purchases through March 31, 2015. After reviewing your Citi® / AAdvantage® Platinum Select® Visa® card account, we found we didn’t give you the correct bonus incentive for the qualifying purchases made during the offer period.
What we’re doing to fix this
We added 562 AAdvantage® miles to your card account. You’ll see this adjustment on your card statement within two billing periods.
The email is referring to this offer for 3x extra points for purchases made via the AAdvantage shopping portal:
Well CITIbank, apology accepted.
Many of the online shopping portals are run by a company called Cartera. You can read more about their business model here. There is a whole thread on Flyer Talk discussing the ins and outs of online shopping portals.
Do you ever find that you are not credited what you expect from your online purchases?
I love to read those silly What’s in My Wallet blog posts. I guess it’s because before I got into points and miles, I would not have believed that you could open an insane number of rewards credit cards without ruining your credit.
It does raise some questions, though:
How could the banks keep extending you credit?
How many times can you earn big bonuses?
How do you remember which card to use for which purchases?
How could you possibly keep track of all those credit cards without missing a payment?
15 is My Limit on Schnitzengruben, I mean Credit Cards
I recently counted 14 credit cards in my wallet from five different banks. That is crazy! I don’t recommend that for anyone.
Miss a single payment and you will be socked with a $35 fee and a major ding to your credit score.
With fourteen active credit card accounts, it is taking too much of my time to track expenses and pay the bills. Let’s face it; my office is cluttered and my wallet barely closes.
I am looking to thin out my collection.
Rewards Credit Cards Aren’t for Everyone
Travel rewards credit cards aren’t for everybody.
First off, you need to have a stellar credit score to be eligible for the best offers.
Most people prefer to carry only one or two cards, to simplify things and minimize the hassle. There is merit to this approach, particularly if you are disorganized and don’t keep current with paying your bills.
A perfectly reasonable strategy is to earn free travel is to focus on one airline or one type of flexible rewards such as Chase Ultimate Rewards points or cash back travel cards like the Capitol One Venture Card, or the Barclaycard Arrival Plus™ World Elite MasterCard®.
But if you have a credit score in the excellent range, and you pay your bills on time and in full every month, rewards credit cards can be incredibly lucrative.
Once you have experienced the large bonus offers for opening a new credit card, which can be worth $500 or more, it is easy to get sucked into to opening more and more accounts to earn free travel.
Know Your Credit Score
From personal experience, I have watched my credit score progressively improve the further along I got in this game. Barclay’s bank offers its credit card customers free access to their official FICO credit score once every three months.
My most recent FICO score is 837, with 14 open accounts, and five additional credit card accounts that I have closed in the past year or so.
That is because my credit line has increased dramatically with all these cards, and my monthly spending is just a small fraction of the available credit.
The banks appear willing to extend me credit well beyond my annual income. Be careful. Like with the mortgage crisis, a lot of people get in debt over their heads from credit cards and can’t make the payments, or end up paying exorbitant amounts of interest, at rate as high as 28 percent annually.
This much is clear: the banks are making plenty of money, but probably not from people like me.
Starting Out with Rewards Credit Cards: The Chase Freedom Card
When I started my environmental consulting business 15 years ago, I opened the Chase Freedom credit card in order to keep my business expenses separate from my personal expenses. Chase Freedom is a personal, not a business credit card but I was using it for business purposes. It carries no annual fee, and earns 5x rewards on select categories of spending. This is a card that I would highly recommend for someone just starting out. The points can be taken as cash back on your next statement, or used as Ultimate Rewards Points. Ultimate Rewards Points are quite flexible and can be transferred to many airline and hotel loyalty programs but you need to have one of the premium credit cards from Chase to enable transfers.
If you are just starting out with travel hacking, the Chase Freedom card is a great place to begin because you can earn cash back or travel rewards, depending on your needs. Because the card has no annual fee, you can keep it forever, thus increasing the length of your credit history over time. This card earns 1x points on all purchases, and 5x points on select categories, that vary each quarter on up to $1500 of purchases per quarter. Generally, the 5x points is good for gas purchases for six months of the year. This spring, the card offered 5x points on restaurants, and sometimes you can get 5x points on Amazon.com, Lowes, or Kohls.
Right now, Chase is offering a $100 bonus for new applications, but I have seen this bonus go as high as $200 after spending $500 on initial purchases within three months. From time to time there is an extra $25 incentive for adding an authorized user to your account. There are cards with bigger bonuses but they usually entail annual fees and larger initial spending requirements.
Pick a Card, Any Card!
Whenever I show anyone what credit cards are in my real wallet, they look at me like I am crazy. I often get looks as I fumble through my wallet looking for the card that earns bonus points at this store or that.
Because I run a small business, I am eligible to apply for business credit cards. This allow me to “double dip” on account bonuses. I travel for both business and personal reasons and must keep my expenses separate for tax purposes. I caution you that business cards can only be used for genuine business expenses and they lack some of the consumer protections of personal credit cards.
What’s in My Wallet?
Here’s a quick rundown of what is in my wallet and why, and which cards are candidates for culling.
Chase Rewards Credit Cards
Quicken Rewards,personal (authorized user): The credit card I’ve had the longest is the Quicken Card issued by Chase Bank. We opened this card over 15 years ago because at the time, it was the one of the few cards that allowed you to download your statements into the Quicken personal accounting software. The Quicken Rewards card pays cash back rewards and carries no annual fee. This cash back card pays 2x drugstores, restaurants, and office supply stores, and 1x points on other purchases. Redemptions for airline tickets can be worth up to 1.25 cents per point, but only if you redeem at the top of a price bracket, e.g. a $500 ticket for 40,000 points. This is a keeper.
Freedom,personal:I love the Chase Freedom card because I can earn 5x points on practical things like gas and restaurants and there is no annual fee. It is a keeper because it pads my Ultimate Rewards point balance, and contributes to the length of my credit history, which is a factor that improves my credit score.
Ink Plus,business: The Chase Ink Plus is my primary business credit card. When I opened the card, I earned 50K Ultimate Rewards points after spending $5,000 in 3 months. This card pays 5x points at office supply stores and on telecommunications and 2 points on gas stations and hotels. The points easily transfer to Amtrak, Southwest Airlines, and United — three of my preferred carriers. Chase offered me a fabulous retention offer which I declined, but I plan to keep the card open.
Ink Bold,business: This is a charge card, not a credit card. The differences is that balances must be paid off every month. I opened this card for my blog business in June 2014 when there was a special bonus offer of 60,000 Ultimate Rewards points after spending $5,000 in three months. This card has a $95 annual fee which is waived the first year. This card has the same bonus categories as the Ink Plus. The usual bonus is 50K points.
Southwest Rapid Rewards,business:I opened the Southwest Rapid Rewards card for the 50,000 mile bonus. That is an offer that rolls around every couple of months. Southwest claims that you can get two roundtrip flights for 50K miles, and that has been my experience. The Southwest Rapid Rewards card has a $69 annual fee that is not waived the first year. You get 3,000 bonus miles every subsequent year. Last year, I was offered an additional 3,000 points as a retention bonus, and this year I received this offer again! I highly recommend the Southwest Rapid Rewards card for budget domestic travelers because of the excellent availability of award tickets on Southwest Airlines.
United Mileage Plus Explorer,personal (authorized user): This is my husband’s card. He opened it because there was a targeted offer for 50,000 miles. The card carries an annual fee of $95 which is waived the first year. When the fee came due, he was offered a retention bonus of 15,000 miles which offset the annual fee, and then some.
Barclays Reward Credit Cards
Barclaycard Arrival™ World MasterCard®, personal: I have the no annual fee version of the Barclaycard Arrival. I opened it because of a targeted offer for 40,000 bonus miles and the ongoing benefits including 2x points on restaurant and travel spending. You get a ten percent rebate on your travel redemptions, so this card effectively pays 2.2 percent cash back. I love the access to my free credit score and the free TripIt Pro subscription. The card now pays a bonus of 20,000 miles for new applicants. This is another keeper.
The US Airways® Premier World MasterCard®, personal:I opened this card because it offered me 35,000 miles after making a single purchase. There is an $89 annual fee which is waived the first year. My version of the card awarded 10,000 bonus miles on your anniversary. It has a number of additional benefits such as one free checked bag for up to four family members, a free lounge pass, and 5,000 fewer miles needed for reward tickets. With this card, you can get 2 companion passes for $99 each, but there are lots of strings attached. I just received the 10,000 mile annual bonus. I called to cancel the card because I did not want to pay the annual fee. This card currently pays a 40,000 mile bonus after the first purchase, but does not offer the annual 10,000 bonus points. It has an $89 annual fee which is waived the first year.
US Airways Dividend Miles,business:I opened this card by “accident.” I had applied for a different version of the US Airways card, but was informed that that it was not possible to have two different personal cards. I was able to switch my application to this business card, and earn 25,000 Dividend Miles upon the first purchase. The annual fee of $89 is waived the first year.
If I spend $3000 within the first three months, I will earn a 50,000 mile bonus.
$3,000 is not an easy reach for me, so I am always on the lookout for special opportunities.
How to Maximize Your Minimums
The Citi AAdvantage business card offers a number of spending categories that earn bonus points. These include two miles for every $1 spent on eligible American Airlines purchases and on purchases at certain office office supply stores, telecommunications, and car rentals, and one mile on all other purchases. Other cards, like the Chase Ink cards pay a five times bonus at office supply stores.
Obviously, if I can focus my shopping on these bonus categories, I will earn the most miles for meeting the minimum spend requirement.
For me, that means shopping at office supply stores like Staples. Last week, I got a good deal on an iTunes card at Staples. This week, I stocked up on toilet paper that was on sale there. Next week, starting Sunday April 27, 2014, there’s a rebate offer on MasterCard gift cards.
$20 Rebate on MasterCard Gift Cards
Staples is offering a $20 rebate on the purchase of $300 worth of MasterCard gift cards.
My plan is to buy three $200 gift cards. The cards have a steep fee of $6.95 each, so if I buy three, I will be paying $21 in fees. The $20 rebate will offset most of these costs.
These cards come with a PIN number, so they can be loaded onto a Bluebird card at Walmart.
I’ll need to get to the Staples store early before these cards sell out. If I am successful, I’ll be $600 and 1,200 miles closer to meeting the minimum spend requirement.
At first blush, you might think that your credit score would go down from opening a lot of rewards credit cards. It does. Your score temporarily drops a few points for each credit inquiry on your credit report.
However, if you pay your bills on time and in full every month (and you should only be in this game if you do) your score could actually increase over time.
That is because an important component of your credit score is credit utilization, or how much of the total credit line is being used.
If your total credit line increases as you open more cards, and the percent of credit utilized decreases, that can have a positive impact on your credit score.
Free FICO Score from Barclaycard Arrival: My Credit Score Increased Over Time
Six months ago, when I first gained access to my official FICO score via Barclaycard, my score was roughly 779. That is in the excellent range. (Sorry, I don’t have a screen shot.)
I wanted to give my credit score a rest, so I stopped applying for new credit cards for a while. As credit inquiries gradually dropped off my report, my score rose to 810 in January 2014.
Three months later, in April 2014, my credit score rose again to 825 out of a maximum score of 850. This is amazing considering the large number of credit cards I have applied for over the last several years.
Stay Alert for Offers for 50K Frequent Flyer Miles
My “strategy” when I first got into this game was to look for rewards cards that offered 50K bonus miles for new applicants. First, I applied for the Southwest credit card for 50K, and then the Southwest business card for 50K. Next I applied for the Delta card for 50K, and then the Delta business card for another 50K. After that I applied for the United card for 50K, and the United business card for 50K.
Actually though, I think a consolidation strategy makes more sense for a lot of people, especially leisure, budget travelers.
Nevertheless, I didn’t follow my own advice, and last summer I applied for the American Airlines AAdvantage credit card for 50K bonus miles.
With my credit score now well above 800, I was now ready to consider applying for additional travel rewards credit cards. So this weekend, I applied for the American Airlines AAdvantage business credit card for 50K bonus points. This card has a $3,000 spend requirement in the first three months to get the bonus, and it has a $95 annual fee that is waived the first year. There are other offers out there for “Executive” versions of the AA card, but they had higher spend requirements than I was comfortable with.