Today we have a question from TPG reader Rhoda who is debating whether to keep her Chase Sapphire Preferred or Ink Bold card open.
“I have both the Sapphire Preferred and Ink Bold cards. After the annual fee-free year is up, would it make more sense for me to keep only the Ink Bold and close the Chase Sapphire Preferred card (because of the 5x office supple category)? I’d possibly like to keep the Ink Bold benefit of 2 free lounge passes per year. Aside from the 7% annual bonus of the CSP card, what would I be missing out on if I were to choose to keep the Ink Bold over the Chase Sapphire Preferred? My annual spend on both cards is about 50 to 60k.”
There are three considerations when deciding what card is most beneficial for you:
1. Whether you want a credit card vs. a charge card
2. Whether a business credit cards makes more sense than a personal credit card
3. Which bonus categories make the most sense for you
When using a charge card you have much greater spending power with no preset spending limits, although you do have to pay the balance off in full every month or incur potentially huge penalty fees. A credit card allows you to run a balance with lower fees than you would normally get hit with when using a charge card.
In terms of business versus personal credit cards, personal cards offer many more protections to cardholders. For example, a credit card company cannot change the terms of the card within the first year, and they have to give you written notice if they change the APR. Business credit cards are basically unregulated with higher interest rates and less protection since small businesses are seen as a greater risk to credit card companies. However, business credit lines are separate from personal credit lines, so if you do run a balance, it won’t drive down your personal score (due to high credit utilization).
Lastly, it’s important to analyze the bonus categories of each card in order to determine which is best for your spending patterns. While the Sapphire Preferred is a personal credit card, you earn 2 points per dollar on all travel and dining (which includes subways, taxis, and parking as well as hotels, airfare and rental cars). With the Sapphire Preferred you also get a 7% bonus every year on all points that you earn throughout the year which translates to earning 2.14 points per dollar on travel and dining and 1.07 points per dollar on everything else. The Ink Bold gives 5 points per dollar up to $50,000 on office supply stores, land line phones, internet, and cable and 2 points per dollar on gas and hotels. Depending on what you spend your money on, the Ink Bold, if leveraged correctly, can earn you more points. One way to max out your earnings at office supply stores is to purchase gift cards at Office Depot or Staples that you can use anywhere.
Personally, I am a big fan of Sapphire Preferred since a lot of my transactions fall in the categories of travel and dining. To avoid fees, you could switch to the Ink Classic, which still offers the 5 points per dollar but has no annual fee. Or you could get the Ink Plus card for another 50,000 points and one more year of no annual fee. Basically when trying to decide which card will be best for you, you should lay out how much you spend and what bonus categories most of your transactions fall into, and choose the card that earns the most points for you. If a card’s annual fee is higher than the value you get, its probably good to assess whether it makes sense to keep it open. Check out this post for information on when to cancel a credit card.