topic Re: Keeping cards alive is an annual fee on it's own. in Credit Cards

Keeping cards alive is an annual fee on it's own.

Subexistence — Fri, 03 Feb 2017 15:57:03 GMT

For example if I had a QS I wanted to keep alive by buying a pack of gum worth $2.00 then I would get 3 cents back. However if I used a citiDC(active card) to buy the gum, I would get 4 cents back. Thus to keep the QS alive, I paid an annual fee of 1 cent.

Re: Keeping cards alive is an annual fee on it's own.

EAJuggalo — Fri, 03 Feb 2017 22:00:40 GMT

But buying that pack of gum on a QS means you can have those three cents whenever you like. With the DC you'd not only have to wait for the statement period to end, then the statement period in which you paid the charge, then until you had $25.00 to redeem.

Re: Keeping cards alive is an annual fee on it's own.

DeeBee78 — Sat, 04 Feb 2017 00:06:09 GMT

@Subexistence wrote:
For example if I had a QS I wanted to keep alive by buying a pack of gum worth $2.00 then I would get 3 cents back. However if I used a citiDC(active card) to buy the gum, I would get 4 cents back. Thus to keep the QS alive, I paid an annual fee of 1 cent.

You're also forgetting that Capital One isn't likely to CLD or close the account, like other *ahem, Barclays* lenders. You could SD a Capital One card for several years and the account would be fine.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:09:56 GMT

You could probably pump a penny of gas and that transaction and payment would constitute usage. That said, the AF of doing this would be negligible, if one didn't already consider the penny or two insignificant.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:27:57 GMT

I agree with the basic sentiment although I wouldn't classify it quite that way (or use such a small example!)

To keep a card alive, you either:

a) remember to buy something small every few months

b) put a monthly subscription on the card.

In the case of a) the lost rewards can be very small indeed, but there is an effort involved in remembering to do this. (Some will find this effort small as well, but wait till you get older.... I've got enough to remember now in 2015, or is it 2016...)

In the case of b) the lost rewards are likely to be a bit higher, but still not immense.

But to me the point is that it is not "free" (either in money or time) to S/D a card but need to keep it alive, apart from the need to monitor S/D cards from time to time. So if you really don't need the card, consider whether it's worth bothering to keep it alive.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:31:31 GMT

Forgive me, I must be missing something here...

Buying a small negligible item, just for usage actually EARNS a couple of cents, as in positive side of the ledger

How would that be considered a fee or of much consequence to be of much concern, given the value sought from having the aged open account?

It's like the 'hassle' of starting a car now and again to keep it in decent running order...Just not a big enough deal to ponder, as a negative

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:33:03 GMT

It seems to me that if having the card isn't worth "losing"a penny, then you should close the card. Seems like a silly thing to worry about to me.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:42:42 GMT

One strategy I am going to try and employ this year (for those SD cards) is to simply take them all to Walmart every 4-5 months and buy a pencil with each one, separate transactions.

Re: Keeping cards alive is an annual fee on it's own.

wasCB14 — Sat, 04 Feb 2017 18:46:13 GMT

@Anonymous wrote:
Forgive me, I must be missing something here...

Buying a small negligible item, just for usage actually EARNS a couple of cents, as in positive side of the ledger

How would that be considered a fee or of much consequence to be of much concern, given the value sought from having the aged open account?

It's like the 'hassle' of starting a car now and again to keep it in decent running order...Just not a big enough deal to ponder, as a negative

The argument is based on opportunity cost; if you use a 1.5% card only to keep an account active when you could otherwise earn 2%, you've paid a small fee by sacrificing the 0.5% difference. Now if someone is rebuilding or has some very old account, I can see value in paying that small "fee".

I've become a fan of closing cards when they no longer serve a clear use. Also, as someone who is into MRs and URs, I think it's silly to fret about a $25 minimum redemption. What's the point of having a card if it takes a long time to only give you $25 of value?

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:49:01 GMT

Amazon subscribe and save you can use a different payment card for each thing you have shipped to your house. Dog food and toilet paper cost the same as at the store

Re: Keeping cards alive is an annual fee on it's own.

nachoslibres — Sat, 04 Feb 2017 18:50:47 GMT

Haha, I guess I'm not the only one who thinks this way. I have a recurring monthly shipping charge of $10 for my business once a month and I alternate between my Marriott and Arrival cards as to who gets the charge because I never use the Arrival card (it's just a leftover CL PC'd from the Arrival+ back when that card used to be good) and my Marriott card only sees sporatic spend (I only use it for Marriott purchases). I've calculated I may be losing $0.10 worth of rewards each month by not putting this charge on my DC but to me the $0.10 is worth keeping these CL's going.

If Barclaycard ever shut down my Arrival account I would be ok with it but I intend to keep it alive as long as possible, especially since I have some of my older closed CLs about to drop off in the next couple of years. I like having a regular charge on my Marriott card, even though it does have an AF which should keep it alive, because I have (and have had several cards) with Chase and don't want to give them any reason to close that account.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 18:57:31 GMT

Every card in my wallet currently serves a purpose of some kind, so inactivity isn't an issue for me. I try my best to keep it that way- I don't see the value in opening a credit card for a store that I rarely shop at, nor do I see the value in opening a card that gets me slightly higher rewards in a category that I rarely spend in.

With that being said, an opportunity cost/'annual fee' of $0.01 is negligible. However, I probably wouldn't keep many (if any) accounts open to the point where I'm struggling to keep them active.

Re: Keeping cards alive is an annual fee on it's own.

kdm31091 — Sat, 04 Feb 2017 19:37:42 GMT

@Anonymous wrote:

But to me the point is that it is not "free" (either in money or time) to S/D a card but need to keep it alive, apart from the need to monitor S/D cards from time to time. So if you really don't need the card, consider whether it's worth bothering to keep it alive.

Agreed and if you are spending just to spend to keep a card alive, then you are likely wasting more money then you are gaining in rewards/benefit by keeping it alive

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 20:52:52 GMT

@Anonymous wrote:
Amazon subscribe and save you can use a different payment card for each thing you have shipped to your house. Dog food and toilet paper cost the same as at the store

But each such purchase presumably has a small cost, in that they are not all being put on "5% at Amazon" cards

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 20:53:38 GMT

KDM and I see eye to eye on this. There is a 'cost' to keeping a card alive and I've always said if you have to go out of your way to spend money on a card to keep it alive, you should just close it!

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sat, 04 Feb 2017 21:25:07 GMT

@Anonymous wrote:
KDM and I see eye to eye on this. There is a 'cost' to keeping a card alive and I've always said if you have to go out of your way to spend money on a card to keep it alive, you should just close it!

I agree, but I guess there are a few exceptions. If you have a thin file, but with one very old card, it MIGHT be worth some time/wasted rewards to keep the old one alive,

Re: Keeping cards alive is an annual fee on it's own.

elim — Sat, 04 Feb 2017 22:28:41 GMT

I have a card I haven't used in 14 months. In the beginning it was all about the green marks (on my reports), now that I have plenty... who cares. Crank up the alerts, throw it in the SD and be done with it. If I feel the need to add more positive reporting, I'll auto-pay myfico or flix (or whatever), or buy a needed item.

You probably won't micromanage this stuff after your rebuild is planted (although it's still a hobby for some)... you can just chill and enjoy the fruit (or the 1 cent rewards on that pack of gum). :]

Re: Keeping cards alive is an annual fee on it's own.

Jeff007245 — Sun, 05 Feb 2017 04:29:20 GMT

I think the proper term you guys are looking for in regards to using a SD card and missing out on a more lucatrive return using a higher rewards earning card is Opportunity Cost.

Oppportunity Cost - the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives. Or a benefit that a person could have received, but gave up, to take another course of action.

In the OP's example the choice is to:

1. Keep a tradeline alive and possibly gain a few fico points, but lose 0.5% in rewards

2. Gain an extra 0.5% in rewards and less micromanagement of another card, but possibly lose a couple fico points because of inactivity and risk getting the acount closed

Re: Keeping cards alive is an annual fee on it's own.

Revelate — Sun, 05 Feb 2017 05:24:53 GMT

So a bit tongue-in-cheek but over the course of your tenures here on the forum how many of you have paid for your scores or for a monitoring solution during that period?

If you're worried about your credit enough to occasionally check at some non-zero cost (kudos to you if you're at a point where free services like CK + Experian are enough for you... I'm close to that point other than when I get a bug to go test something in the algorithms) why not spend a bit of money to improve it?

Do you need a bunch of aged cards, no not really other than AAOA buffering (which has diminishing returns like everything else), but I'd suggest with how all algorithms are setup these days you need at least one. I have a buddy who went through a BK, he picked up a $59 AF rebuilder card after said BK (Orchard or similar, never asked him which one) and even to this day he happily pays the $59 AF as that cost is trivial to him for keeping that now 20ish year old tradeline around.

I don't typically break my time down to the equivalent of capex and opex in the financial world, but if it only costs me a bit of time to setup some recurring fee and autopay, and then I can pretty much forget it for years at a time, the opportunity cost is near zero, and the lost rewards are way way way below my financial trivial threshold.

And yes, I still spend the $60 for all 3 sets of scores once a year anyway... that costs me way more than what we're talking about here with imputed annual fees based on keeping the card active.

PS. Budgetting to the penny level is a waste of time for everyone I would suggest, and there will be some threshold for everyone where it just doesn't matter... I call it my slush fund, YNAB falls under something like "**bleep** I forgot" as a default budget suggestion, anything lost in the margins here in keeping cards being active, just falls there. Ain't no big thing.

Re: Keeping cards alive is an annual fee on it's own.

Anonymous — Sun, 05 Feb 2017 16:40:40 GMT

I can understand holding onto an account I got BEFORE a credit mishap, as I wouldnt qualify for it presently. Somehow I'm getting that feeling, like some card needs attention and protection because its out of reach if it was applied for now.