Beyond Credit Card Benefits and Annual Fees
It’s natural to want to keep things simple. Indeed, I try to do that in a variety of areas in my current life season – within our points and travel hobby and beyond. And when it comes to which cards to open, close, keep, or avoid, those conversations can inevitably lead to whether the credit card benefits make up for the annual fees. I – and many others who cover this stuff on the internet for money – write about benefit values and reconcile those with annual fees. But, in many cases, we can’t simply boil the conversation down to, “will I at least get back what I pay for?” Or, more accurately, we can’t necessarily make the best decisions by just focusing on those two factors. Other stuff is at play, and today, I’m talking about factors worth considering beyond credit card benefits and annual fees.
Application Rules
Bank application rules can discourage individuals from pursuing certain cards which are otherwise attractive (with or without a signup bonus). Of course, perhaps the worst version of this policy is the Chase 5/24 rule. Since it applies to such a wide swath of cards (but not everything), the rule’s ability to sway decisions is remarkable. Individuals interested in more Chase cards must pass up a variety of attractive alternatives. We gave up on new Chase account approvals years ago and have no regrets.
Bank of America’s 3/12 and 7/12 rules (in addition to a few others) are something to consider, as well. For what it’s worth, my wife and I haven’t had issues working around these while still obtaining everything else we want with BoA and other banks.
Uncertainty
Like many of you, my travel plans change. That can affect both the variety and volume of travel I take. How much of the benefit you plan to use compared to how much you actually do consume are often very different. Even worse, travelers don’t necessarily have an accurate picture until after committing to substantial annual fees. And, um, stuff happens. How would you like to be an Amex Platinum cardholder whose primary lounge choice was closed due to health issues? Of course, individuals can mitigate any value downturns by being more conservative in their benefit value estimates. But we certainly can’t predict every negative development.
Duplicate Benefits
Points and travel hobbyists, from casual to busy, often hold different cards, sometimes from different banks, which offer overlapping benefits. This can lead individuals to erroneously overvalue given cards in a vacuum. For instance, different card products convey the identical hotel elite status or allow access to the same lounges. Having more of the same in return for more money in annual fees is largely useless.
The Scarcity of Time
But hey, let’s say you’ve done a great job ensuring you don’t hold duplicate benefits across multiple cards and you’re not planning to apply for cards subject to stringent application rules. Depending on the timeframe, that describes my wife and me. Taking on another card, its benefits, and fees isn’t necessarily a sure thing.
Unfortunately, when we pick up another new card, it doesn’t come with more time to enjoy the benefits. We pay the same amount as every other cardholder, but the individual with a few cards can maximize those values more easily than other individuals who have many more to balance.
This conundrum is similar to the one many face with streaming services. (Let’s pause here and pretend that you actually pay for all of your streaming services.) Most likely, the individual who subscribes to one service obtains more value out of that one than another person who subscribes to half a dozen and spreads their time out across them all. They pay the same for that one service, but one actually gets more value than the other.
Credit Card Benefits – Conclusion
These are just a few areas to consider. Bottom line, one’s optimal card decision involves more than a simple benefits and annual fee discussion. This can get murkier the more cards individuals add to their portfolios and the increasing lengths they hold them. On the bright side, cardmember year one decisions can be simpler, where the welcome offer can supersede any extended focus on benefits and annual fee. But people wanting cards with stringent application rules are signing up for a more convoluted life with that bank and others. It’s worth talking about credit card benefits and annual fees, but don’t lose sight of all of the other factors at play in your given situation.
Beyond credit card benefits, annual fees, and signup bonuses, what other angles do you take into account in your credit card application decisions?
