topic Re: Honest question on AF's in Credit Cards

Honest question on AF's

merlinflex — Thu, 22 Jan 2015 21:15:27 GMT

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.

Re: Honest question on AF's

heyarrnold — Thu, 22 Jan 2015 21:22:33 GMT

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

Re: Honest question on AF's

Anonymous — Thu, 22 Jan 2015 21:22:12 GMT

@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.

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.

Re: Honest question on AF's

PNW_Hunter — Thu, 22 Jan 2015 21:36:57 GMT

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

Re: Honest question on AF's

Anonymous — Thu, 22 Jan 2015 21:47:32 GMT

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

Re: Honest question on AF's

longtime_lurker — Thu, 22 Jan 2015 21:51:44 GMT

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

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.

Re: Honest question on AF's

-NewGuy- — Thu, 22 Jan 2015 21:56:34 GMT

@Anonymous 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

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.

Re: Honest question on AF's

mongstradamus — Thu, 22 Jan 2015 21:58:46 GMT

@-NewGuy- wrote:
@Anonymous 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
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.

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.

Re: Honest question on AF's

kdm31091 — Thu, 22 Jan 2015 22:54:43 GMT

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.

Re: Honest question on AF's

Anonymous — Thu, 22 Jan 2015 23:04:37 GMT

@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.

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 +.

Re: Honest question on AF's

Anonymous — Thu, 22 Jan 2015 23:05:48 GMT

@kdm31091 wrote:
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.

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.

1. Hey, I resemble that remark.

2. But if your spend aligns or is over the required amount then it works out. Never spend money you wouldn't normally spend just to get a bonus.

Re: Honest question on AF's

Chris679 — Thu, 22 Jan 2015 23:13:24 GMT

Most of the talk about removing AF on this board is from people who are/were rebuilding. Now they their situation has improved the are rightfully trying to get those fees removed because they are graduating to better cards. I don't see a ton of discussion about the high end cards because that is a simply question of math. When you are starting out/rebuilding there is more gray area about if you should continue to pay AF or not.

Re: Honest question on AF's

Anonymous — Thu, 22 Jan 2015 23:17:41 GMT

Ok so let's see if i can explain succinctly how i approach credit cards. I will say right off the bat that my income is relatively low (mid 30k's).
The only card i keep and justify the annual fee solely from the earning structure is the chase ink plus the 5x UR at office supplies where i buy giftcards to southwest, amazon etc makes up for the fees.
All other cards i will either get if
1) they have no AF and i like the earning structure. Stuff like Fidelity Amex, Freedom or formerly Cash+
2) Cards with AF that have a bonus. I would never get an AF card without a bonus. If the AF is not waived the first year then the bonus has to be substantial. After the first year i have to evaluate whether the card has recurring benefits worth keeping. Hotel cards that offer one free night per year usually make it worth keeping for that alone. However, i would not spend much money on those. There are very few cards that are better than the Fidelity/Doublecash for regular non-category spend. Someone like me does not spend nearly enough money to make stuff like the EDP be worth it solely for the category spend. The only AF card that i can think of that i would actually put a great of spend on is the club carlson premiere that offers 5 points/$ for general spend.

Am i "building a relationship" with banks? I am through my no AF cards. Those should convince them that i can pay on time. That is all they want really. Beyond that, they want to make as much money as possible out of me, and i want to make as much money as possible out of them. It is business, pure and simple. No hard feelings. No feelings at all. They certainly have none for you

Re: Honest question on AF's

bada_bing — Thu, 22 Jan 2015 23:49:58 GMT

I have two AF cards that I've had for years; a BoA AlaskaAir card and a BCP. I generally

avoid AF's unless they really make rewards sense. Most AF cards do not make longterm

sense for my spend.

The AkAir is easy to explain, I spend ~$8K on Alaska airlines per year, and between

the bonus miles and the annual companion fare coupon, it's a no-brainer with no competition.

I don't like BoA as an issuing bank, but that's another story.

The BCP is a more convoluted benefit calculation. I could do slightly better, cashback wise,

if I picked up a second Sallie Mae and dumped the BCP and it's annual fee. My BCP is just for

groceries (about $6k a year) and car rental ($1k a year). It isn't just about a simple cashback

calculation. As much as I currently love Barclays, I am not 100% confident the Sallie Mae is

nerf proof, not nearly to the extent I belive BCP is. Amex offers some purchase protections I

believe superior to Barclays. I will attempt to get a second SM later this spring, but I'm not willing

to dump the BCP just yet, even if I'm successful. Diversification is hard to quantify, but definitely

has some value.

One AF card I will app for and then dump sometime in the next 18 months is either a CSP or an

Ink, for the purpose of consolidating and transfering about 100k UR I have sitting stranded on my

Freedom and Ink cash. I have no long term use for either CSP or Ink plus, I just need a conduit for

UR transfer. Not exactly ethical I admit.

Re: Honest question on AF's

kdm31091 — Fri, 23 Jan 2015 00:16:25 GMT

I agree that Sallie Mae is probably not nerfproof, I think BCE/BCP have a lesser chance of being nerfed. 5% even with Sallie's caps doesn't seem like something that will last forever on a no AF card (think: there are really no other no AF cards with 5% on anything, much less groceries, yes the caps are low, but still, who knows).

The other downside of Sallie vs. the Amex choices like BCE/BCP is the lack of redemption variety. Some don't see it as an issue, because they take statement credits anyway, but I like that my BCE at least has some flexibility and I can get gift cards too.

Re: Honest question on AF's

Anonymous — Fri, 23 Jan 2015 00:22:41 GMT

@kdm31091 wrote:
I agree that Sallie Mae is probably not nerfproof, I think BCE/BCP have a lesser chance of being nerfed. 5% even with Sallie's caps doesn't seem like something that will last forever on a no AF card (think: there are really no other no AF cards with 5% on anything, much less groceries, yes the caps are low, but still, who knows).

The other downside of Sallie vs. the Amex choices like BCE/BCP is the lack of redemption variety. Some don't see it as an issue, because they take statement credits anyway, but I like that my BCE at least has some flexibility and I can get gift cards too.

I'd rather buy GC's and use statement credit.

Re: Honest question on AF's

yfan — Fri, 23 Jan 2015 00:29:25 GMT

@kdm31091 wrote:
I agree that Sallie Mae is probably not nerfproof, I think BCE/BCP have a lesser chance of being nerfed. 5% even with Sallie's caps doesn't seem like something that will last forever on a no AF card (think: there are really no other no AF cards with 5% on anything, much less groceries, yes the caps are low, but still, who knows).

Actually, the Orbitz Visa is a no-AF card that gives you 5% back on Orbitz purchases, and 2% on all other purchases. There is also no FTF. But you have to use the rewards for Orbitz hotel bookings. There is also no FTF.

Re: Honest question on AF's

Anonymous — Fri, 23 Jan 2015 00:31:11 GMT

@yfan wrote:
@kdm31091 wrote:
I agree that Sallie Mae is probably not nerfproof, I think BCE/BCP have a lesser chance of being nerfed. 5% even with Sallie's caps doesn't seem like something that will last forever on a no AF card (think: there are really no other no AF cards with 5% on anything, much less groceries, yes the caps are low, but still, who knows).
Actually, the Orbitz Visa is a no-AF card that gives you 5% back on Orbitz purchases, and 2% on all other purchases. There is also no FTF. But you have to use the rewards for Orbitz hotel bookings. There is also no FTF.

And the buypower card has some similar rewards for buying a GM vehicle.
But orbitz hotel credit or GM new car credit ain't cash

Re: Honest question on AF's

yfan — Fri, 23 Jan 2015 00:35:14 GMT

@Anonymous wrote:
@yfan wrote:
Actually, the Orbitz Visa is a no-AF card that gives you 5% back on Orbitz purchases, and 2% on all other purchases. There is also no FTF. But you have to use the rewards for Orbitz hotel bookings. There is also no FTF.
And the buypower card has some similar rewards for buying a GM vehicle.
But orbitz hotel credit or GM new car credit ain't cash

Right. But it can be just as good if it's something you use. The Buypower card's 5% is limited to $5,000 a year in spending though.

Re: Honest question on AF's

Anonymous — Fri, 23 Jan 2015 00:37:04 GMT

@yfan wrote:
@Anonymous wrote:
@yfan wrote:
Actually, the Orbitz Visa is a no-AF card that gives you 5% back on Orbitz purchases, and 2% on all other purchases. There is also no FTF. But you have to use the rewards for Orbitz hotel bookings. There is also no FTF.
And the buypower card has some similar rewards for buying a GM vehicle.
But orbitz hotel credit or GM new car credit ain't cash
Right. But it can be just as good if it's something you use. The Buypower card's 5% is limited to $5,000 a year in spending though.

@Would take you 10 years just to cover TTL at max spend @ 5%