Honest question on AF's

[merlinflex]

Noticing a lot of posts about people transferring, dumping or downgrading cards due to AFs?  What's up with that?

Like Amex PRG AF, $175, big deal, better points and better card than the Green or Gold Amex.  Why apply for in the first place if you cannot stomach the AF? 

Same with CSP and Barclays World Elite MasterCard, $89, neither are even a blip on my radar, spend more than that ordering out some nights for the family.

Esp those with lower FICO's.....below 700, should more interested in maintaining and building relationships with the CC issuer as opposed to small AFs.

Just my opinion and to each their own, not trying to offend anyone, so don't take it that way.

[heyarrnold]

It depends on how much you value the rewards that each card gives and their reward structure. Let's take the PRG as an example. If you value MR points at .1c, you'd need 17,500 MR points to just break even with the annual fee. Unless you're MS, putting a lot of spend on the 3x category of the card, you'd have to spend at most $17.5k on the card to generate 17.5K points. For some people this does not make sense. And some, like myself, at times apply for certain cards for their sign up bonuses. And if the card, once the annual fee is about to hit, no longer generates value for me, well, I have no problem dumping the card. Unless a fee waiver or a retention offer is given of course

[Anonymous]

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@merlinflex wrote:

Noticing a lot of posts about people transferring, dumping or downgrading cards due to AFs?  What's up with that?

Like Amex PRG AF, $175, big deal, better points and better card than the Green or Gold Amex.  Why apply for in the first place if you cannot stomach the AF? 

Same with CSP and Barclays World Elite MasterCard, $89, neither are even a blip on my radar, spend more than that ordering out some nights for the family.

Esp those with lower FICO's.....below 700, should more interested in maintaining and building relationships with the CC issuer as opposed to small AFs.

Just my opinion and to each their own, not trying to offend anyone, so don't take it that way.

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If you spend enough on the card or there aren't better cards out there with 0 AF, then yeah...It makes sense to pay the AF. Otherwise though, It simply doesn't.

[PNW_Hunter]

My only AF card is my Amex BCP. I do not spend enough to justify my CSP AF...

[longtimelurker]

Yes, some people react badly to AF, but it really should just be part of the calculation in determining which card to get.   My decision is simply:

Estimated rewards (based on spend and where spending) - AF > same calculation for other cards I could get

[longtime_lurker]

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@PNW_Hunter wrote:

My only AF card is my Amex BCP. I do not spend enough to justify my CSP AF...

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My only AF card that will be retained long-term is my Amex Surpass. Gold HHonors + Employee rate = some kick ass, rediculously cheap rooms with free breakfast + internet. <--notice that this isn't because my spend justifies the fee. This is also true with cards like the Amex Plat (no bonus earning, but some great benefits)

...My CSP is going to be cancelled next week when the 7% dividend posts, because I have better, no-AF cards for their bonus categories. My PRG will be cancelled, as well, because there aren't benefits for me paying the $175 AF. 

[-NewGuy-]

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@longtimelurker wrote:

Yes, some people react badly to AF, but it really should just be part of the calculation in determining which card to get.   My decision is simply:

Estimated rewards (based on spend and where spending) - AF > same calculation for other cards I could get

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I agree. The AF should just be part of the calculation made to determine if a card is acceptable for someone.

However, to the original point, there are many scenarios where someone might cancel due to the AF. On a card where the AF is waived the first year, it's a good chance to determine whether that card is truly beneficial for you or not. Also, other cards come out that might work better. For me, the EDP would work better than the PRG, so if I had the PRG I would certainly cancel before the AF hits. Many people (whether it's something you agree with or not) simply get cards for sign up bonuses with no intention of keeping it past the first year (or downgrading to a no AF version). So there are some reasons.

[mongstradamus]

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@-NewGuy- wrote:

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@longtimelurker wrote:

Yes, some people react badly to AF, but it really should just be part of the calculation in determining which card to get.   My decision is simply:

Estimated rewards (based on spend and where spending) - AF > same calculation for other cards I could get

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I agree. The AF should just be part of the calculation made to determine if a card is acceptable for someone.

However, to the original point, there are many scenarios where someone might cancel due to the AF. On a card where the AF is waived the first year, it's a good chance to determine whether that card is truly beneficial for you or not. Also, other cards come out that might work better. For me, the EDP would work better than the PRG, so if I had the PRG I would certainly cancel before the AF hits. Many people (whether it's something you agree with or not) simply get cards for sign up bonuses with no intention of keeping it past the first year (or downgrading to a no AF version). So there are some reasons.

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The only reason to have PRG over edp imo is if you travel an lot. the 3x could come into play , but for majority of people i think EDP is the superior card. Just like the ED is the superior card when you compare it to green or gold cards. 

[kdm31091]

Generally, you are only going to be able to justify an AF if you are a moderate to high spender. Some dump cards after AF hits because they were simply opening it for the sign up bonus (sorry, but it's the truth). Not that everyone does that, but it's a factor.

If you aren't a heavy big spender, or a big traveller, most AF cards aren't going to make sense. I am single, and my income is not huge, so my spending isn't huge. My travelling consists of a beach trip each summer, maybe two nights, and very infrequently some other kind of vacation, so basically 2 trips max for the year. That's not enough to justify an AF travel card. For people with a family, kids, whatever, it's different, and they spend enough to justify AF cards which do tend to have higher benefits. The problem is in my case (and for other moderate/low spenders), the benefits are absorbed and then some by the AF which we don't spend enough to justify!

It certainly doesn't work for everyone. I would never get anywhere close to enough benefit to justify a $395 AF card like the Ritz. There's just no way. I doubt I even reach $400 a year in rewards across all my cards, period. Bonus year excluded it would be a total lose, and I'd struggle to spend enough (legitimately) to meet the bonus spend.

That's the other thing, some kind of get talked into cards because of the great bonus, but if you have to spend a lot of money above what you would normally spend to get the bonus, it's not a good deal. Spending $3000 to get $400 is great, but, if you normally would have spent $1500 in 3 months, that's still worse than just saving your money and getting a card that suits you better.

[longtimelurker]

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@kdm31091 wrote:

Some dump cards after AF hits because they were simply opening it for the sign up bonus (sorry, but it's the truth). Not that everyone does that, but it's a factor.

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No need to apologize,those that do it know that they are doing it, and believe (unlike you) there is nothing wrong with so doing!

Re medium to high spend, that depends on the AF and card.   So the BCP makes sense over the BCE at around $2,500 per year, which is not (to my mind) much of a big spend at all.   (Of course, you SHOULD use the Sallie Mae, but for those deciding between the two Amex).  

And with the hotel cards,  if you stay a few nights per year, you usally more than make up the fee

But yes, some other cards need a lot of spend, or a lot of well thought out travel, to justify once the fee is due, e.g. Barclays Arrival +.