topic Re: Too many CCs with AF? in Credit Cards

Too many CCs with AF?

CreditMENA — Wed, 27 Feb 2013 04:09:04 GMT

Hey all,

I'm busy trying to expand my credit portfolio and maximize my rewards. I'm looking to app for the AMEX Blue Cash Preferred Card, but I'm worried I'm taking too many cards with an annual fee. My current lineup:

-Chase Sapphire Preferred ($10,000 limit, $95 AF)

-Southwest RR Premier ($5,000 limit, $99 AF)

-Random Wells Fargo ($4,000 limit $0 AF)

I hit the right timing and got 50,000 points when I received both the CSP and the Southwest card - I use the CSP 99% of the time and only use the Southwest card when I book Southwest flights. One of the perks of being a Southwest Premier member is an annual point bonus of 6,000 points which is the equivalent of $100 anyways, so it kind of cancels out the AF.

The CSP is great for my dining and travel expenses, and the AMEX BCP gives cash back on gas, groceries, and department stores - which basicaly rounds out my spending habits. However, it also has an annual fee of $75 bringing my grand total to $269/year simply to use credit cards.

So the question remains - do I app for it or not? I'm also a member of NFCU but do not have a credit product through them. Thanks in advance!

Re: Too many CCs with AF?

7PM789 — Wed, 27 Feb 2013 03:59:13 GMT

You're merging two different cards in to one.

The blue cash everyday has no annual fee, the blue cash preferred has an annual fee.

Re: Too many CCs with AF?

E150GT — Wed, 27 Feb 2013 04:00:51 GMT

If you arent going to use it enough to make use of all the fees then no. You could get the Blue cash everyday for free though.

Re: Too many CCs with AF?

CreditMENA — Wed, 27 Feb 2013 04:04:20 GMT

@7PM789 wrote:
You're merging two different cards in to one.

The blue cash everyday has no annual fee, the blue cash preferred has an annual fee.

Sorry about that, you're correct. Fixed the original post.

I guess I could go for the Everyday card...gives 3% instead of 6% at supermarkets and 2% instead of 3% at gas stations but for a single guy I don't really spend that much at supermarkets anyways..

Re: Too many CCs with AF?

7PM789 — Wed, 27 Feb 2013 04:06:20 GMT

The B.C.E. gives 3% back on groceries
The B.C.P. gives 6% back on groceries

The B.C.E. gives 2% back on gas
The B.C.P. gives 3%back on gas

Both give 1% back on everything else.

The annual fee on the B.C.P. is $75.00

Re: Too many CCs with AF?

CreditMENA — Wed, 27 Feb 2013 04:09:34 GMT

@7PM789 wrote:
The B.C.E. gives 3% back on groceries
The B.C.P. gives 6% back on groceries

The B.C.E. gives 2% back on gas
The B.C.P. gives 3%back on gas

Both give 1% back on everything else.

The annual fee on the B.C.P. is $75.00

Got it, thank you for the clarification. Would the Everyday card make more sense for me then?

Re: Too many CCs with AF?

SnackTrader — Wed, 27 Feb 2013 04:10:27 GMT

You need to figure out if you spend more than $210 per month at grocery stores. That's where the breakeven point for the AF is.

Also - it sounds like all of the AFs are justified, so I wouldn't worry too much about adding another if it is also justified in terms of reward structure.

Re: Too many CCs with AF?

navigatethis12 — Wed, 27 Feb 2013 04:11:13 GMT

When you get enough rewards to just cancel the annual fee, it's not worth it to have the card. I would say you have to make at least twice the annual fee to make it worthwhile.

Re: Too many CCs with AF?

SnackTrader — Wed, 27 Feb 2013 04:18:05 GMT

@navigatethis12 wrote:
When you get enough rewards to just cancel the annual fee, it's not worth it to have the card. I would say you have to make at least twice the annual fee to make it worthwhile.

$2,500 in grocery spending is twice the AF for the BCP - which leaves the account holder with $150 in rewards, but an AF of $75 for a net total of $75. That is the same amount as a person would have if they spent $2,500 with the BCE. All spending after $2,500 in a year earns better rewards than the BCE - so for those families reaching the $6,000 max it is very worth it.

I would say that it is very hard for a single guy to make the AF on the BCP worth it unless you NEVER eat out and have lots of BBQs or something. Or if your grocery store sells alcohol.

Re: Too many CCs with AF?

CreditMENA — Wed, 27 Feb 2013 04:23:06 GMT

@SnackTrader wrote:
@navigatethis12 wrote:
When you get enough rewards to just cancel the annual fee, it's not worth it to have the card. I would say you have to make at least twice the annual fee to make it worthwhile.
$2,500 in grocery spending is twice the AF for the BCP - which leaves the account holder with $150 in rewards, but an AF of $75 for a net total of $75. That is the same amount as a person would have if they spent $2,500 with the BCE. All spending after $2,500 in a year earns better rewards than the BCE - so for those families reaching the $6,000 max it is very worth it.

I would say that it is very hard for a single guy to make the AF on the BCP worth it unless you NEVER eat out and have lots of BBQs or something. Or if your grocery store sells alcohol.

Great point - I can tell you right now I don't spend $2,500 on groceries. Looks like the BCE would be the logical choice..eventhough now I'm weighing the marginal utility against just keeping those charges on my CSP and racking up more rewards points.

Re: Too many CCs with AF?

navigatethis12 — Wed, 27 Feb 2013 04:24:23 GMT

@SnackTrader wrote:

$2,500 in grocery spending is twice the AF for the BCP - which leaves the account holder with $150 in rewards, but an AF of $75 for a net total of $75. That is the same amount as a person would have if they spent $2,500 with the BCE. All spending after $2,500 in a year earns better rewards than the BCE - so for those families reaching the $6,000 max it is very worth it.

I would say that it is very hard for a single guy to make the AF on the BCP worth it unless you NEVER eat out and have lots of BBQs or something. Or if your grocery store sells alcohol.

I was actually referring to when CreditMENA said the 6000 miles cancels out the annual fee. I should have said more than double, not just double.

I spend a moderate amount on groceries (being a vegetarian is not cheap), so I went for the Blue Cash Everyday over the Preferred last year. I really am just against annual fees, so even if it offered 10% back, I would have still gotten the Blue Cash Everyday. I am sure there are people who do get the Blue Cash Preferred and don't really make back the annual fee though.

Re: Too many CCs with AF?

navigatethis12 — Wed, 27 Feb 2013 04:26:58 GMT

@CreditMENA wrote:

Great point - I can tell you right now I don't spend $2,500 on groceries. Looks like the BCE would be the logical choice..eventhough now I'm weighing the marginal utility against just keeping those charges on my CSP and racking up more rewards points.

Unless you are able to convert the Chase Sapphire Preferred points at a rate of three cents per points, it makes more sense to get the Blue Cash Everyday, or the Citi Thank You Preferred for the 5% on groceries.

The Sallie Mae credit card also gives 5% back on groceries, but has a $250 a month cap.

Re: Too many CCs with AF?

SnackTrader — Wed, 27 Feb 2013 04:28:53 GMT

@navigatethis12 wrote:
@SnackTrader wrote:

$2,500 in grocery spending is twice the AF for the BCP - which leaves the account holder with $150 in rewards, but an AF of $75 for a net total of $75. That is the same amount as a person would have if they spent $2,500 with the BCE. All spending after $2,500 in a year earns better rewards than the BCE - so for those families reaching the $6,000 max it is very worth it.

I would say that it is very hard for a single guy to make the AF on the BCP worth it unless you NEVER eat out and have lots of BBQs or something. Or if your grocery store sells alcohol.
I was actually referring to when CreditMENA said the 6000 miles cancels out the annual fee. I should have said more than double, not just double.

I spend a moderate amount on groceries (being a vegetarian is not cheap), so I went for the Blue Cash Everyday over the Preferred last year. I really am just against annual fees, so even if it offered 10% back, I would have still gotten the Blue Cash Everyday. I am sure there are people who do get the Blue Cash Preferred and don't really make back the annual fee though.

They don't buy enough gift cards for birthdayChristmas presents.

Re: Too many CCs with AF?

youngandcreditwrthy — Wed, 27 Feb 2013 13:48:01 GMT

Pretty sure the Amex website says you only need to spend $25 a week on groceries to take care of the $75 AF on the BCP.
$100 per month x.06 = $6 per month @12 mos= $72 annually..about right ;-)

I like BCE though just bc I hate AFs!

Re: Too many CCs with AF?

youngandcreditwrthy — Wed, 27 Feb 2013 13:48:39 GMT

I also buy my alcohol (wine mostly) ay Kroger lol- a grocery store

Re: Too many CCs with AF?

navigatethis12 — Wed, 27 Feb 2013 14:26:28 GMT

@youngandcreditwrthy wrote:
Pretty sure the Amex website says you only need to spend $25 a week on groceries to take care of the $75 AF on the BCP.
@$100 per month x.06 = $6 per month @Anonymous mos= $72 annually..about right ;-)

If you only spend that much what is the benefit? What I'm saying is that if you spend enough to just make the annual fee, the card is not worth it. As SnackTrader pointed out, getting $150 in rewards is till pointless because the $75 annual fee gives you the same you would have gotten if you had the Blue Cash Everyday. They put that there so people who do spend that little bit will think it's a great deal.

Re: Too many CCs with AF?

youngandcreditwrthy — Wed, 27 Feb 2013 14:33:47 GMT

Which is why I don't have the BCP.

I was simply noting the innacurate info provided by our fellow poster :-)

otoh, the words "preferred" scrolled across the side of the BCP are pretty :-) lmao.

Re: Too many CCs with AF?

SnackTrader — Wed, 27 Feb 2013 14:48:58 GMT

The information I have provided has been in no way inaccurate. I have stated mathematical facts about the benefits of the BCP vs. BCE.

Assuming a card holder only uses the card for groceries, the BCP is ONLY worth it if a person spends at least $48.08 per week, or $210 per month, or $2,500 per year on groceries at qualified stores. Anything less than that will not allow you to recover the AF, while still earning the same amount of rewards as with the BCE.

The $25 stated on the Amex website relates to earning enough rewards to cancel out the AF. But as active cc users we should be worried about net rewards, which take into account rewards minus annual fees.

The BCP is probably not right for this OP given his grocery spending.

Re: Too many CCs with AF?

youngandcreditwrthy — Wed, 27 Feb 2013 14:56:38 GMT

I guess we just have differing ways of looking at it.

fact is though: you don't need to spend $210 a month just to break even.

again, I have the BCE lol :-)

Re: Too many CCs with AF?

Anonymous — Wed, 27 Feb 2013 15:02:20 GMT

To respond to the title of the post, rather than the OP's actual question (and I agree with the responses here that the BCP is probably not right for this person's spend).

There does seem to be a lot of almost knee-jerk reaction towards annual fees, with people rejecting a card merely because it has an annual fee. So just a reminder that this is not fully rational!

For any card that you consider, the questions should always be: For the next year, given my expected spending patterns and my goals (cash back, travel etc) will:

a) this card provide net rewards over any annual fee or other charges (redemption costs etc)

b) AND, is this card superior for this purpose over other cards that I could probably get.

So annual fees raise the bar to overcome for both a and b over cards that don't have them, but in some cases, an annual fee card will be the best choice.

IF your AF card passes the test, to me the only reason to be more cautious is if there is a possibility that your spending habits might change (e.g. you move and the supermarkets in your new place don't take Amex, making the BCP a bad choice). This impacts all cards of course, but with an annual fee you are paying out real money rather than merely not being able to get expected rewards, which feels worse.

Note that this is numbers-based view, so I am ignoring more subjective factors such as "I really want a relationship with Amex because, well, because" and "I am a total dork who thinks metal cards make me a better person" (It's time for my gratuitous insults).