Honest question on AF's

[Anonymous]

We get cards for the rewards (points/cash back) or the perks (lounge access, upgrades, etc). In order to keep a card once the second year AF hits, the cards benefits must outweigh the cost. If I kept every single one of my AF cards and renewed them, I would have over $1500 in AFs. Some of those AFs are worth it because the rewards or perks are worth more than the cost. Others like the Amex PRG are useless for me and I only got it for the 50k bonus MR points and when the next AF hits I will cancel it. 

People with borderline credit scores or thin files should not be going on app sprees or applying for cards for sign-on bonuses and canceling them after a year. For people with thick credit files (I have over 60 reporting accounts) and excellent credit scores, churning AF cards can be a great way to earn free travel. I spend over 60k each year ($75k in 2014) on my cards and the miles and cash back from sign-on bonuses add up. While the AFs are not a significant burden, I don't see the need to renew my United Explorer or Amex PRG because those are cards I put very little spend on once I got the sign-on bonus. 

For those with thin files or less than excellent credit scores, churning cards for sign-on bonuses is a bad idea. Also, if I were looking to refinance or get a new mortgage, I would probably stop churning cards for a year to age my inquiries out. Given my situation, however, churning cards for sign-up bonuses is well worth it and has netted me and my family several free trips around the world. Better yet, most of those trips are first class, the type of trips I would think twice about buying with cash despite my relatively good income. 

[Anonymous]

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@Anonymous wrote:

We get cards for the rewards (points/cash back) or the perks (lounge access, upgrades, etc). In order to keep a card once the second year AF hits, the cards benefits must outweigh the cost. If I kept every single one of my AF cards and renewed them, I would have over $1500 in AFs. Some of those AFs are worth it because the rewards or perks are worth more than the cost. Others like the Amex PRG are useless for me and I only got it for the 50k bonus MR points and when the next AF hits I will cancel it. 

People with borderline credit scores or thin files should not be going on app sprees or applying for cards for sign-on bonuses and canceling them after a year. For people with thick credit files (I have over 60 reporting accounts) and excellent credit scores, churning AF cards can be a great way to earn free travel. I spend over 60k each year ($75k in 2014) on my cards and the miles and cash back from sign-on bonuses add up. While the AFs are not a significant burden, I don't see the need to renew my United Explorer or Amex PRG because those are cards I put very little spend on once I got the sign-on bonus. 

For those with thin files or less than excellent credit scores, churning cards for sign-on bonuses is a bad idea. Also, if I were looking to refinance or get a new mortgage, I would probably stop churning cards for a year to age my inquiries out. Given my situation, however, churning cards for sign-up bonuses is well worth it and has netted me and my family several free trips around the world. Better yet, most of those trips are first class, the type of trips I would think twice about buying with cash despite my relatively good income. 

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What do you consider a thin file?

I absolutely consider my profile to be borderline for the most part, but not sure about thin.

[kdm31091]

I would agree that if you have a long history with a thick file in good standing, you can probably "afford" to churn for bonuses sometimes, but I still wouldn't go hogwild with it. Sooner or later, the lender is going to catch on and stop approving you, there are only so many lenders out there.

To each their own though. It's not worth the "free travel" for me since I barely travel, lol

Good points about the Orbitz and the Buypower being 5% with no AF, but admittedly very niche and restrictive products.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

We get cards for the rewards (points/cash back) or the perks (lounge access, upgrades, etc). In order to keep a card once the second year AF hits, the cards benefits must outweigh the cost. If I kept every single one of my AF cards and renewed them, I would have over $1500 in AFs. Some of those AFs are worth it because the rewards or perks are worth more than the cost. Others like the Amex PRG are useless for me and I only got it for the 50k bonus MR points and when the next AF hits I will cancel it. 

People with borderline credit scores or thin files should not be going on app sprees or applying for cards for sign-on bonuses and canceling them after a year. For people with thick credit files (I have over 60 reporting accounts) and excellent credit scores, churning AF cards can be a great way to earn free travel. I spend over 60k each year ($75k in 2014) on my cards and the miles and cash back from sign-on bonuses add up. While the AFs are not a significant burden, I don't see the need to renew my United Explorer or Amex PRG because those are cards I put very little spend on once I got the sign-on bonus. 

For those with thin files or less than excellent credit scores, churning cards for sign-on bonuses is a bad idea. Also, if I were looking to refinance or get a new mortgage, I would probably stop churning cards for a year to age my inquiries out. Given my situation, however, churning cards for sign-up bonuses is well worth it and has netted me and my family several free trips around the world. Better yet, most of those trips are first class, the type of trips I would think twice about buying with cash despite my relatively good income. 

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What do you consider a thin file?

I absolutely consider my profile to be borderline for the most part, but not sure about thin.

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I doubt you have a thin file given your cards in your profile. An extreme example of a thin file would be someone with 1 single reporting account for 1 year. They could have a 700+ score with such a profile and a perfect history, but they would face many more denials than someone with the same score and an established file. Your overall score is supposed to be indicative of the risk of default, but with thin files the score is not such a good indicator of default risk. Simply put, the more established (or thick) your file is the better your overall credit profile is given the same score. Like anything else there is diminishing returns with regards to file thickness. Going from 1 to 10 reporting accounts is huge, but going from 10 to 20 is note quite as big. File thickness is also not merely how many accounts you have but also how long they have reported and how often they have reported. A backdated Amex looks better than a new account but worse than your original Amex that has a recorded payment history over the years. 

There is no real line between a thick and thin file, but thick files are better. 

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@kdm31091 wrote:

I would agree that if you have a long history with a thick file in good standing, you can probably "afford" to churn for bonuses sometimes, but I still wouldn't go hogwild with it. Sooner or later, the lender is going to catch on and stop approving you, there are only so many lenders out there.

To each their own though. It's not worth the "free travel" for me since I barely travel, lol

Good points about the Orbitz and the Buypower being 5% with no AF, but admittedly very niche and restrictive products.

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I have had over 45 different CCs (probably closer to 50 now) in the last 4 years that I have actively churned cards. Most lenders approve me for the vast majority of cards. Barclays usually gives me the 7-10 day message, but approve on recon (sometimes I have to move credit lines). Chase generally approves me unless I go application crazy (tried to go 3 cards on same day in October and got rejected on third). Amex has not rejected me yet and I have had more Amex accounts than I can remember. 

I do get rejected occasionally, but most of the rejections generally have to do with total recent inquiries or new accounts and the vast majority of them can be approved by recon. I only have 2 rejections in the last year and change that I could not get approved even after recon, but those were me trying silly things (3 chase on 1 day and 2 barclays on 1 day). I sometimes go overboard with the applications since my spend is high enough for 2-3 sign-on bonus cards a month. 

[Anonymous]

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@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.

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Both BCP and SM have been nerfed in the past, BCP much more so!   Originally, the BCP had no cap on grocery spend, which made it a great card!   The Sallie Mae used to be $500 per month combined grocery and gas (which was a little better because of the greater flexibility in spending in the two categories) and $1000 per month on bookstores

So don't know how you can assign a greater liklihood one way or the other.

Re redemption variety:  As Nixon says, unless the cards are discounted, getting a statement credit and buying the gift card (even at a store) is going to be better, because you will get credit card rewards on the purchase.  If you go through an exchange, you will also get the gift card cheaper.   Statement credit is as good as anything if you use the card regularly (and if they can mail you the check, even better)

[kdm31091]

Well, I haven't redeemed anything through Amex's rewards yet so I don't know if their gift cards as discounted, but I know Discover's almost always are ($20 for $25 or $45 for 50) so that is a better deal than a couple percent in rewards, but it depends

I never knew the BCP was uncapped. I know the old Blue Cash is uncapped after you spend x amount. Uncapped 5 (or 6!) percent cards are just never going to be sustainable without some sort of restriction IMO, like how on the old Blue Cash you have to spend a lot before you get the uncapped higher yield. I'm sure no issuer can afford to just give out unlimited 5%, even with an AF

[red259]

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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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There are a whole bunch of reasons. First, you should never being paying an AF if it does not have value to you. Some cards waive the AF the first year and have good signups. For example the Amex PRG. I got it for the signup offer and to get my foot in the door with amex. A year later the card has zero value for me, because they released the amex everyday card (at the time I got my charge card that card did not even exist so new products can play a roll as well). I can't even think of a purpose I would need to use the card for. I have my foot in the door with amex with other revolvers, I have the everyday card so I am still able to earn MRs and keep the ones I have. Why would I pay $175 for something that is completely useless to me? I have other amex cards so my relationship is not going anywhere with them. Its not going to hurt my fico score because the account will remain on my report for another ten years.

CSP same deal. I got the signup offer already. I can downgrade it and keep the restaurant bonus. My travel expenses aren't that great so I don't really need that bonus and I have an ink card so I get all the other benefits from that. Why pay $95 for something I don't need? Right there between those two cards alone (I am able to save $270 in AFs for something I don't even need anymore). Heck that would strongly negate many of the rewards I earned and has nothing to do with not being able to "stomach" AFs. I do pay AFs on several other cards for either the perks or the earning potential, but I won't pay for ones that do not have value. It depends on my spend and what cards overlap etc.  I'm glad these fees are not a blip on your radar, but if you are paying AFs on cards that have no value to you then I think the appropriate question is why are you throwing your money away?  

[kdm31091]

Of course, the counterargument is that you know full well what the AF is when you obtain the card, and issuers do not intend for you to get the card strictly for the bonus and then cancel. They're not trying to just give money away to people who aren't going to be long time cardholders.

[red259]

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@kdm31091 wrote:

Of course, the counterargument is that you know full well what the AF is when you obtain the card, and issuers do not intend for you to get the card strictly for the bonus and then cancel. They're not trying to just give money away to people who aren't going to be long time cardholders.

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They have initial spend requirements so they are making money off the transactions, so I don't feel bad in the least. Of course, when the citi exec card came out with the 100k offer people were getting several cards getting the spend and closing the accounts right away to get the AF back. I refused to do that but citi let people keep doing it for awhile. 

[Chris679]

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@kdm31091 wrote:

I would agree that if you have a long history with a thick file in good standing, you can probably "afford" to churn for bonuses sometimes, but I still wouldn't go hogwild with it. Sooner or later, the lender is going to catch on and stop approving you, there are only so many lenders out there.

To each their own though. It's not worth the "free travel" for me since I barely travel, lol

Good points about the Orbitz and the Buypower being 5% with no AF, but admittedly very niche and restrictive products.

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I think you should start going hogwild.  If you handle your cards responsibly there is no need to worry about making CCC happy.  They are rolling in cash so why not put them to work for you?  If one doesn't want your business there will be 10 more lining up for it.