Card type vs. Income

[bch238]

My 2 cents:  Get a card that you know you can benefit from based on your actual historical spend..  Don't get a card based on aspirations of traveling and dining more, because a credit card shouldn't be a reason to overspend.  You have to spend a lot of money to get the big rewards.  Obviously, there are ways to rationalize it.  For example, the $250 airfare reimbursement with the Citi Prestige effectively reduces the annual fee to $200, but only IF you plan on flying every year.  Many folks don't.  Even if you do, then you still have an effective $200 fee.  Will you dine enough, stay in hotels often enough, to reap the benefits?  If you stay in hotels that cost $200 a night, and you think you will use the 4th night free benefit once per year, then your annual fee on the Prestige would effectively be zero, but only if you also fly every year.   Only after that will you beging to start earning rewards.  With a no-fee or lower fee card, you are in the black earlier.

My wife and I are high-earning professionals.  We have two teen kids.  We fly 3-4 times a year for family trips.  We stay in hotels frequently. We travel for work.  It is worth it to us.  When we were younger and made a lot less, I don't think I could have justified the fees on the cards I have now.  Maybe the CSP, which is still my favorite and most-used card.  I also tend not to consider the sign-up bonuses when evaluating a card because I'm in it for the long-haul.

Only you know your spending habits, though.  Figure out what you realistically could spend and see what works.

[msbia]

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@bch238 wrote:

My 2 cents:  Get a card that you know you can benefit from based on your actual historical spend..  Don't get a card based on aspirations of traveling and dining more, because a credit card shouldn't be a reason to overspend.  You have to spend a lot of money to get the big rewards.  Obviously, there are ways to rationalize it.  For example, the $250 airfare reimbursement with the Citi Prestige effectively reduces the annual fee to $200, but only IF you plan on flying every year.  Many folks don't.  Even if you do, then you still have an effective $200 fee.  Will you dine enough, stay in hotels often enough, to reap the benefits?  If you stay in hotels that cost $200 a night, and you think you will use the 4th night free benefit once per year, then your annual fee on the Prestige would effectively be zero, but only if you also fly every year.   Only after that will you beging to start earning rewards.  With a no-fee or lower fee card, you are in the black earlier.

My wife and I are high-earning professionals.  We have two teen kids.  We fly 3-4 times a year for family trips.  We stay in hotels frequently. We travel for work.  It is worth it to us.  When we were younger and made a lot less, I don't think I could have justified the fees on the cards I have now.  Maybe the CSP, which is still my favorite and most-used card.  I also tend not to consider the sign-up bonuses when evaluating a card because I'm in it for the long-haul.

Only you know your spending habits, though.  Figure out what you realistically could spend and see what works.

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I love this response. 

[jsucool76]

I disagree but that's just my 0.02

you don't NEED to fly every year. can just buy airline gift cards and save them up for a vacation. that's an effective use of the airline credit. that's $500 the first year! already passing the annual fee. aspirations for travelling aren't forcing anyone to overspend, and you don't need to be a big spender to reap the rewards of the credit card industry. you just need to know how to play the game.

spending 3000$ in 3 months is not "big spending" but it will get you up to $800 off the signup bonus alone. maybe the poster doesn't fly every year, but $1300 in free airfare means they can fly somewhere, all with only spending $3000 for the bonus, and a $450 fee.

once again, you spend $450 and you get $1300

#AnyoneCanDoIt #YouDontNeedToOverspend

[Anonymous]

Somewhere in between the last 30 years and now the line seems to have blurred between haves and have nots.

What does this really mean?

Things that were previously considered luxuries are now commonly regarded to as necessities. Can you make this card work for your level of spend overall? Assess this factor carefully.

[kdm31091]

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@jsucool76 wrote:
I disagree but that's just my 0.02

you don't NEED to fly every year. can just buy airline gift cards and save them up for a vacation. that's an effective use of the airline credit. that's $500 the first year! already passing the annual fee. aspirations for travelling aren't forcing anyone to overspend, and you don't need to be a big spender to reap the rewards of the credit card industry. you just need to know how to play the game.

spending 3000$ in 3 months is not "big spending" but it will get you up to $800 off the signup bonus alone. maybe the poster doesn't fly every year, but $1300 in free airfare means they can fly somewhere, all with only spending $3000 for the bonus, and a $450 fee.

once again, you spend $450 and you get $1300

#AnyoneCanDoIt #YouDontNeedToOverspend

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While this may be mathematically correct, you have to understand that some people do not have the time or money to travel like that, and/or don't want to tie up their money in airline gift cards for when they "might travel soon". And yes, you still need money to travel and you still need time. Not everyone has several weeks of paid vacation time every year. Some people have nothing like that.

Heck not even everyone has aspirations to travel. No matter what anyone on here says until they are blue in the face, there is no "free money" here. Yes, your airfare will be covered by the bonus. That does not make it a "free trip". You still eat on a trip. You still buy things. What if you're doing to Disney? Even with airfare paid for that is the least of your concerns. Park tickets alone are many hundreds of dollars for several days.

Also, after year one when the AF kicks in and you have no bonus, there is really no reason IMO for someone who barely travels to have say, a Ritz or a Marriott card. It makes no sense and they are better off with a plain cash back card. Even an Arrival+ makes little sense outside of large spending (after year one) and willingness to use it against travel.

My point is not everything is going to work for everyone. No matter how much math you go over, some people just may not be into it for the same reason you are. Everyday consumers are not going to obtain a Ritz and buy airline GCs to save up for the future and justify their fee. And guess what? That's okay. These are credit cards and the only person who has to like their card and benefit from it is the person using it!

[bch238]

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@jsucool76 wrote:
I disagree but that's just my 0.02

you don't NEED to fly every year. can just buy airline gift cards and save them up for a vacation. that's an effective use of the airline credit. that's $500 the first year! already passing the annual fee. aspirations for travelling aren't forcing anyone to overspend, and you don't need to be a big spender to reap the rewards of the credit card industry. you just need to know how to play the game.

spending 3000$ in 3 months is not "big spending" but it will get you up to $800 off the signup bonus alone. maybe the poster doesn't fly every year, but $1300 in free airfare means they can fly somewhere, all with only spending $3000 for the bonus, and a $450 fee.

once again, you spend $450 and you get $1300

#AnyoneCanDoIt #YouDontNeedToOverspend

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Nobody is "forced" to do anything.  It is a choice.  My advice was to choose not to allow aspirational spend factor into your credit decisions.  And a lot of people don't follow that advice, regardless of their income.   Many end up strapped or bankrupt.  With regard to saving up for airfare every year, you fail to consider that that might be done only to feed aspirational travel that otherwise wouldn't happen.  So you get the subsidized airfare.  Great.  Then you need a hotel.  And you need to eat out.  Vacations are expensive.  And for many, $450 a year is a hell of a lot of money to lay out on a credit card fee.  If you have a family income of $80,000 gross, that is a huge chunk of discretionary after-tax income, assuming you are (a) saving for retirement, (b) insuring your health, (c) insuring your car and home/possessions, (d) saving for a home, (e) paying for kids, (f) saving for kids' education, etc. 

[kdm31091]

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@bch238 wrote:

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@jsucool76 wrote:
I disagree but that's just my 0.02

you don't NEED to fly every year. can just buy airline gift cards and save them up for a vacation. that's an effective use of the airline credit. that's $500 the first year! already passing the annual fee. aspirations for travelling aren't forcing anyone to overspend, and you don't need to be a big spender to reap the rewards of the credit card industry. you just need to know how to play the game.

spending 3000$ in 3 months is not "big spending" but it will get you up to $800 off the signup bonus alone. maybe the poster doesn't fly every year, but $1300 in free airfare means they can fly somewhere, all with only spending $3000 for the bonus, and a $450 fee.

once again, you spend $450 and you get $1300

#AnyoneCanDoIt #YouDontNeedToOverspend

---

Nobody is "forced" to do anything.  It is a choice.  My advice was to choose not to allow aspirational spend factor into your credit decisions.  And a lot of people don't follow that advice, regardless of their income.   Many end up strapped or bankrupt.  With regard to saving up for airfare every year, you fail to consider that that might be done only to feed aspirational travel that otherwise wouldn't happen.  So you get the subsidized airfare.  Great.  Then you need a hotel.  And you need to eat out.  Vacations are expensive.  And for many, $450 a year is a hell of a lot of money to lay out on a credit card fee.  If you have a family income of $80,000 gross, that is a huge chunk of discretionary after-tax income, assuming you are (a) saving for retirement, (b) insuring your health, (c) insuring your car and home/possessions, (d) saving for a home, (e) paying for kids, (f) saving for kids' education, etc. 

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Exactly. Thank you for such a good post. Couldn't have said it better myself.

I have no problem with people who want to play the game. The problem is sometimes they do not grasp that others may not be able or willing to do the same thing, and that's fine!  $450 is a lot of money - period. It's fine if you benefit from paying that AF and it works for you. For others? Maybe they don't have that extra money, or if they do they don't want to spend it on a travel card.

Excellent point too that the poster is failing to consider that many people obtain such a card and go on trips they otherwise wouldn't, thus they are overspending which is exactly what the issuer wants. They subsidize your airfare and you're encouraged to take more trips, inevitably spend more money....this is all part of the issuer's plan. They are not your friend. They want to make MONEY!

If you are seriously already planning a trip, I can see obtaining a card to help pay for it or get the free airfare or whatever although honestly just plain old saving up your money the "old fashioned" way is perfectly fine too. However, getting a card because of "future possible trips" is a temptation to overspend to earn more rewards towards the trips. Rewards are psychological. People chase them and wind up spending more in the process. Issuers are well aware of this and love seeing it happen. This is why they offer them. To make money!

[Anonymous]

Well, after getting all these great replies, I've decided that the Citi Prestige probably isn't the card for me, no matter how nice or rewarding it is. I don't really travel ALL that often. And, if I'm not gonna make up for the AF, then I probably shouldn't make that dive.

I'm also second guessing whether or not to keep my Marriott Premier... Haha. I do prefer the Marriott hotels... This is one of the reasons I picked up the card. Can this card be PC'd to a Freedom, or something more appropriate for me?

I really appreciate everyone's input. It's been great reading.

[kdm31091]

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@Anonymous wrote:

Well, after getting all these great replies, I've decided that the Citi Prestige probably isn't the card for me, no matter how nice or rewarding it is. I don't really travel ALL that often. And, if I'm not gonna make up for the AF, then I probably shouldn't make that dive.

I'm also second guessing whether or not to keep my Marriott Premier... Haha. I do prefer the Marriott hotels... This is one of the reasons I picked up the card. Can this card be PC'd to a Freedom, or something more appropriate for me?

I really appreciate everyone's input. It's been great reading.

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I think you can PC to a Freedom but you'll have to call and ask because cobranded cards are always harder to PC and sometimes you can't.

Good for you for realizing that just because the Prestige is popular doesn't mean it's necessarily right for you. Even cards like the Marriott do not benefit everyone and if you can't justify it it's certainly smart to PC or close it. Personally, I don't want a hotel card because I'm not loyal to any certain chain. On a trip, I try to go with the cheapest hotel that is still clean, and I am not sitting around in my room, I'm exploring wherever I am! So the room makes little difference and a hotel card is useless for me. However I know that that's total YMMV.

[hiro905]

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@bch238 wrote:

My 2 cents:  Get a card that you know you can benefit from based on your actual historical spend..  Don't get a card based on aspirations of traveling and dining more, because a credit card shouldn't be a reason to overspend.  You have to spend a lot of money to get the big rewards.  Obviously, there are ways to rationalize it.  For example, the $250 airfare reimbursement with the Citi Prestige effectively reduces the annual fee to $200, but only IF you plan on flying every year.  Many folks don't.  Even if you do, then you still have an effective $200 fee.  Will you dine enough, stay in hotels often enough, to reap the benefits?  If you stay in hotels that cost $200 a night, and you think you will use the 4th night free benefit once per year, then your annual fee on the Prestige would effectively be zero, but only if you also fly every year.   Only after that will you beging to start earning rewards.  With a no-fee or lower fee card, you are in the black earlier.

My wife and I are high-earning professionals.  We have two teen kids.  We fly 3-4 times a year for family trips.  We stay in hotels frequently. We travel for work.  It is worth it to us.  When we were younger and made a lot less, I don't think I could have justified the fees on the cards I have now.  Maybe the CSP, which is still my favorite and most-used card.  I also tend not to consider the sign-up bonuses when evaluating a card because I'm in it for the long-haul.

Only you know your spending habits, though.  Figure out what you realistically could spend and see what works.

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I agree with this.  If you plan on keeping cards for the long-haul you need to address your spend and see whether an AF makes sense.  Get a card that compliments your general spending.