When to Cancel a Credit Card: My Personal Card Inventory and Decision Process
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This is the second post in a series on my most recent round of credit card applications and will focus on how to conduct a personal credit card inventory and decide which cards to keep and those to cancel. The first post covered the basics of credit and how to perform a personal check to make sure everything is healthy before a round of applications. Post 3 is evaluating the top current card offers and which offers to go after and which to hold off on. Post 4 is the results of my applications and my experience with reconsideration lines.
Before applying for a fresh new batch of credit cards, I always like to take inventory of my current cards and decide which are not carrying their weight so I can then try to fill the gaps with new cards.
Things I take into consideration:
1) Are the perks/benefits of each card more than the annual fee?
2) Is there a duplicate/substitute card that can get me similar benefits/perks and a new sign-up bonus?
3) How long have I had the card? Is it worth keeping open to preserve the history of the account?
I went through each card in my portfolio and did a quick cost/benefit analysis. I don’t need to cancel any cards – most credit card companies will let you have numerous cards and as long as your credit score is strong and you pay your bills on time, that is what matters most. However, I don’t like having unnecessary accounts open if I’m not using the card or getting valuable benefits. Plus, I’d rather cancel a card now and give it a year or two and then hopefully get the sign-up bonus again down the line (this works for most issuers besides Chase, but timelines vary).
While it is good to keep accounts open for a long time, the age of your accounts is only 15% of your credit score, so as long as you have a couple old accounts helping to keep the average long, that should suffice though there is really no set formula that will guarantee a high credit score. As I talked about in the first post in this series maintaining a strong credit score is integral to playing the points game.
Putting a Value on Perks and Benefits
My valuations will likely differ from yours – especially since I am fortunate to have a significant amount of credit card spend. I put almost every single dollar of personal and business spend on cards, as well as a lot from family and friends. I’m always that guy at dinner who will put a huge meal on my card to “simplify things” and then get paid from everyone. I buy a lot of Vanilla Reload cards to pay all of my mortgage/car/HOA and other bills by credit card (via Bluebird). So I have the luxury of being able to hit some lofty spend thresholds to get some of the best perks out there.
When evaluating your needs, estimate your annual spend on credit cards and then decide which spend bonuses are worth your while and which cards best align to the categories where you spend most of your money.
Should I Stay or Should I Go?
After thinking about my current cards (you can see my basic spreadsheet below), I came to the following conclusions:
Chase Sapphire Preferred: Keep, but at some point switch to the Mastercard version and get the sign-up bonus and enjoy most of the same benefits.
Chase Ink Bold: This is my workhorse business card – I use it to buy lots of office supplies, including gift cards for major retails like Starbucks and get 5 Chase points per dollar spent. Keep.
Chase Ink Plus: It’s basically the same thing as Ink Bold, but a credit card so you could theoretically run a balance and pay over time. I pay all of my bills off every month so I don’t need this duplicate version. If I were spending more than the $50,000 in some of the 5x categories I’d think about it, but I am focusing spend on other cards to hit bonuses/perks so I plan to let this one go.
Chase Ink Exclusives (Discontinued): When you spend $100k you are getting 1.67 Ultimate Rewards points per dollar spent. So on large purchases, like tax bills, for me it makes sense to spend the 1.8 cents per dollar in fees for using a credit card to get 1.67 Ultimate Rewards points since I value UR points at about 2 cents each.
Chase Freedom (No longer open to new applicants): I get 7,500 points per quarter by spending $1,500 in the bonus categories like Starbucks (Q1), drugstores (Q2) and at stores like Lowe’s (Q2). Since there is no annual fee, I will keep it around, though at some point I may switch to the Mastercard version if there’s another 20,000-30,000 sign-up bonus. No rush there. Keep.
Chase Hyatt Credit Card: I don’t put any spend on this card, but the category 1-4 annual fee night far outweighs the $75 annual fee, plus having it often gives me bonuses during Hyatt promotions. Keep.
Chase British Airways Visa Signature Card: Even though British Airways charges big fees on Companion Ticket redemptions, the bottom line is that I can get two business class roundtrip tickets from NY/Philadelphia to London for a total of 80,000 Avios and $800 a ticket. I value business class roundtrip to Europe at $2,500, so I’m coming out way ahead here – even with the fees. Keep.
American Express Platinum: I value lounge access and since I fly American and Delta, having access to both saves me having to pay over $900 in membership fees. The $450 annual fee is even further justified by the $200 yearly airline rebate, which I used on buying American Airlines gift cards, so essentially it costs me $250 for the lounge access and perks like Fine Hotels & Resorts and free Global Entry ($100 value). However, there is a Mercedes-Benz Platinum that comes with a 50,000 point sign-up bonus, so my plan is to switch to that card to continue getting the same perks, snag a solid bonus and get another $200 in airline rebates.
Premier Rewards Gold Card from American Express: I buy lots of airfare, so the 3x per dollar category spending bonus is the main way I boost my Membership Rewards balance so I can take advantage of their (seemingly more infrequent) transfer bonuses. Plus I get 15,000 points at $30,000 in spend, which more than justifies the $175 annual fee. Keep.
The Business Gold Rewards Card from American Express OPEN: I use the Ink Bold for most business expenses, so I haven’t been using this card much at all. Cancel and potentially pick up in 12+ months if they run any more lucrative 75,000 point offers.
American Express Starwood Personal: I like the 2 stay/5 night elite status benefit, but it’s already been applied to my account. I may cancel my personal card and just use my business version (with OPEN benefits), especially since the balance will sit on my business credit report and not impact my personal score. Cancel.
American Express Starwood Business: Keep (see above).
Citi American AAdvantage Visa: I like the 10% up to 10,000 miles rebate, which pays for the $75 annual fee, however I don’t need two cards. Keep and cancel the Amex.
Citi Select American AAdvantage American Express: Cancel (see above).
Citi Hilton HHonors Reserve: The free weekend night at top-tier hotels more than pays for the $95 annual fee. Keep.
MBNA/Bank of America University of Pittsburgh No Annual Fee Card: Keep since I’ve had the account open for almost 10 years.
Capital One Basic Card (I even forgot the name since I never use it!): Keep since I’ve had the account open for almost 10 years.
|Other Valuable Perks/ Benefits||Duplicate?||Value from Perks/
|Chase Sapphire Preferred||Personal||2x travel and dining||7% annual dividend on all points earned including bonus category; no FX fees||Mastercard w 40k sign-up bonus||7% Dividend was 22,940 = $459||$95||Keep, but get Mastercard at some point|
|Chase Ink Bold||Business||5x internet/office supplies/ phone, 2x gas and hotels||Lounge Club, No FX fees||Plus (Already have)||Low end I get 100,000 points a year in 5x = ~$2,000||$95||Keep|
|Chase Ink Plus||Business||5x internet/office supplies/ phone, 2x gas and hotels||Lounge Club, No FX fees||Bold (Already Have)||I don’t exceed the 5x on my Bold so not getting $95||$95||Cancel if I don’t need the extra $50k spend capability in 5x category|
|Chase Ink Exclusives (Discontinued)||Business||1.2 points per dollar + 7,500 points at $25k+ 15,000 at $50k + 25,000 at $100k||Bold/Plus||I max out the 100k so 167,500 points = $1,350||$95||Grandfathered in, so keep|
|Chase Freedom||Personal||5x quarterly (capped at $6k total per year)||Mastercard||30k points from 5x categories = $600||$0||Keep, but get the Mastercard down the line|
|Chase Hyatt Credit Card||Personal||2x restaurant, airline, car rental||Chip + Signature||No||Annual free night = $175 easily||$75||Keep, annual free night pays for annual fee|
|Chase British Airways Visa Signature Card||Personal||1 on everything, 3 on BA||Companion Award Ticket at $30k in spend, no FX fees, Chip + Signature||No||Companion ticket easily = $1,300||$95||Keep, companion ticket pays for the annual fee many times over|
|Amex Platinum||Personal||$200 airline rebate + lounge access + free Global Entry and more||Mercedes-Benz + Business Version||$200 annual rebate makes $250 for all other benefits including lounge access to American and Delta a no-brainer. Pays for itself||$450||Switch to MB version for 50k points|
|Amex PRG||Personal||3x airfare, 2x gas and grocery||15,000 points at $30k spend||Business version with frequent 75k signups||15k at $30k in spend = $270||$175||Keep, 15k bonus is worth ~twice annual fee.|
|Amex BRG||Business||3x airfare, 2x on advertising in select media, gas, and shipping||Not maximizing bonus categories, so not meeting annual fee||$175||Cancel since I don’t put enough in 2x categories to justify fee. Get again in 12+ months potentially for large bonus|
|Starwood Amex||Personal||2x on Starwood||2 stays/ 5nights towards elite status, Gold status at $30k||Business version||2 stays/5 nights credit is easily worth $150||$65||Keep business version for OPEN discounts and hope to get personal again next year after 12 months of account closing for signup again|
|Business Starwood Amex||Business||2x on Starwood||2 stays/ 5nights towards elite status, Gold status at $30k||Personal version||2 stays/5 nights credit is easily worth $150||$65||Keep|
|Citi AA Visa||Personal||2x on American||10% miles back up to 10k miles a year when redeeming AA, $100 AA credit with $30k in spend||American Express||10k in rebates is worth $180, but only going to keep one card||$75||Keep|
|Citi AA Amex||Personal||2x on American||10% miles back up to 10k miles a year when redeeming AA, $100 AA credit with $30k in spend||Visa||10k in rebates is worth $180, but only going to keep one card||$75||Cancel, because I already got 10k mileage rebate and potentially want to get this card again late next year|
|Citi Hilton Reserve||Personal||10x on Hilton plus 5x on Airline and Car rental||Free weekend night at $10k in spend, Diamond at $40k, Gold with just having card open||Amex Hilton products like Surpass with Diamond status at $40k||Weekend night at $10k in spend is easily worth $300||$95||Keep because free night at $10k spend is worth more than twice annual fee|
|Cap One Mastercard (Old College)||Personal||0||Keep to help average age of accounts|
|MBNA/BOA Card (Old College)||Personal||0||Keep to help average age of accounts|
Since it looks like I’ll be canceling 5-6 cards, I came to the conclusion that I wanted 5 or 6 new ones. Stay tuned tomorrow to see which cards I chose and why and whether I got approved or not!
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