Frequent Miler’s Card Talk is a new bi-weekly series in which Nick and I meet with a reader to do a credit card intervention. What credit cards should you get and which should you dump? Our goal is to help! We started Card Talk originally with a test card intervention with reader Jim. Jim had way too many credit cards with high annual fees. We successfully talked Jim through almost $3,000 in savings! Read about the original Card Talk episode here: Saving $2,897 in annual fees: a Card Talk intervention.
Meet Jennifer & family
Jennifer applied to be a guest on Card Talk with this submission:
Two player mode here with one college student just starting in. We started Dec of 2016 after paying way too much for an Italy vacation. We’ve since taken all six if us to Disney World and Egypt and spent a nice week without kids in Jamaica all on points. Last year’s points were for a family trip to California and a couples trip to Ireland with friends, both on hold. This last few months we’ve lost focus and need some re-direction. What is worth paying the fee on, where should we be putting spend, how can we cycle in a second college student?
Europe (two weeks) for all six of us
Prague and Budapest for just us
Sending one of the college kids to Oxford for a semester
Extended family beach trip (need an easy plan to share with novice family members.)
We thought Jennifer’s case would be interesting because it involves both a tough challenge (how to earn enough points to travel with 6 people), and a great opportunity (two kids are old enough to sign up for credit cards!).
After speaking with Jennifer, here were our recommendations…
Dump almost $1,400 in card fees
Two Sapphire Reserve cards
Jen and her husband each have their own $550 Sapphire Reserve card. It sounds like they do get good value from having one card, but there’s no reason to have two.
- When the annual fee comes due, downgrade one Sapphire Reserve card to the no-fee Chase Freedom Unlimited (1.5X everywhere) or no-fee Freedom (5X in rotating categories)
- Move points from all other Chase Ultimate Rewards cards to the one remaining Sapphire Reserve account so that the points will be worth the maximum value possible.
$550 per year (or $250 per year if you account for the $300 travel credit they won’t get).
Ink Business Preferred
Jen’s husband picked up the $95 per year Chase Ink Business Preferred card early this year. This card consistently offers one of the best welcome bonuses around, but its perks (such as 3X for travel and the ability to transfer points to partners) are mostly redundant since the couple plans to keep a Sapphire Reserve card.
- When the annual fee comes due, cancel (after moving all points to the Sapphire Reserve account) or downgrade to the no-fee Chase Ink Business Cash (5X categories) or the no-fee Chase Ink Business Unlimited (1.5X everywhere).
- This advice assumes that Jen’s husband doesn’t highly value the Ink card’s cell phone protection which is the card’s one feature that beats the Sapphire Reserve.
$95 per year.
Two Delta Platinum cards
Jen and her husband each have their own $250 Delta Platinum card. Neither is seeking Delta elite status so the only real value to the card for them is the ability to get free checked bags and the annual companion ticket. It’s unclear whether they’ll consistently use the companion ticket for good value.
- When the annual fee comes due for each card, wait for the companion ticket to appear in your Delta account and then cancel the Delta Platinum card. When using the companion ticket, you have to pay with an American Express card, but it doesn’t have to be a Delta Platinum card.
- After cancelling the Platinum card, if you need free checked bags with Delta, consider signing up for the $99 Delta Gold card (ideally when there’s a 60K or higher offer available). After a year with the Gold card you can decide whether to keep as is, upgrade to the Platinum card, or cancel.
$500 per year if both cards are cancelled (or $400 per year if Jen or her husband ends up getting a Delta Gold card)
Citi AA Platinum card
Jen’s husband has a fairly new Citi American Airlines card. While the first year was free, Citi will start charging $99 per year upon renewal.
- When the annual fee comes due, convert the card to the no-fee Citi Double Cash card. The Double Cash card is an awesome one to have, but it usually has no welcome bonus so this is a great way to get the card.
- In the future, Jen’s husband may also be interested in picking up the Citi Premier and Citi Rewards+ cards in order to setup the awesome trio of cards that I wrote about previously here: Citi’s awesome trio: Double Cash, Premier, Rewards+
You could say that we saved Jen $99 per year, but it sounds like converting to the Double Cash was her plan all along, so we won’t count this one!
Late last year, Jenn signed up for both the $199/year Southwest Performance Business card and the $149/year Southwest Priority card. She signed up for those cards in order to earn the Southwest Companion Pass.
- Jen values the Priority card’s perks more than the annual fee so she’ll keep the card. Those perks include: 7,500 anniversary points each year; $75 Southwest annual travel credit; Four A1-15 boardings every year; and 20% back on in-flight drinks, Wi-Fi, messaging, and movies.
- We recommended cancelling the Southwest Performance Business card since it doesn’t offer any meaningful perks above the other card other than 9,000 points per year.
$199 per year.
Jen and her husband each have the $450/year Hilton Aspire card. Jen says that they get full value from the cards’ $250 in airline incidental fees and the $250 in resort credits.
- Even though the annual fees are steep ($450 x 2 = $900), Jen and her husband each get $500 back per year from the airline and resort credits, plus they each get a free weekend night good at almost any Hilton in the world. And they each get top-tier Hilton Diamond status! These cards are keepers.
New cards & opportunities
With two kids in college, ages 18 and 19, there are four adults in the family who can sign up for credit cards. Currently all four are well under 5/24 and so are eligible for new Chase cards.
|Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months.
To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status. The easiest option is to track all of your cards for free with Travel Freely.
After talking with Jen, we identified four objectives:
- Start building second oldest daughter’s credit so that she can earn welcome bonuses
- Get two Southwest Companion Passes at a time. This will make it possible to fly the family of six for the price of four.
- Continue to build up the family’s Chase Ultimate Rewards points
- Start earning Amex Membership Rewards points
Build teen credit
Once a kid turns 18, they are eligible to sign up for credit cards. That doesn’t mean that they’ll get approved though. I always recommend that 18 year olds start with the Discover It Student card as their first card. Jan’s 19 year old already has that card. Jan should encourage her 18 year old to sign up for the card right away. Of course, she also ought to help her daughter learn to handle credit responsibly. That’s outside of the scope of this card intervention, but important nevertheless.
Jan can also help her two youngest children (age 14) to begin building credit by adding each as an authorized user.
Please see these posts for more detail:
- Building (and viewing) teenage credit
- Planning a teen’s first credit card
- My teen’s first credit card, and his next steps towards rewards
- A student credit card plan: 825,000 points by graduation
Southwest Companion Passes
In most cases, the easiest way to get the Southwest Companion Pass is to wait until late in the year (October or November) and sign up for both a business and consumer Southwest card. Southwest credit card welcome bonuses change regularly and it is often possible to earn the required 125,000 points from two bonuses. But, when signing up late in the year, you don’t want to meet the spend requirements just yet. Wait until January to meet the spend requirements so that the points will post in January. In this way, you get a Southwest Companion Pass good for as many flights as you want for the rest of that year and all of the next. In other words, by timing it carefully, it’s possible to earn a companion pass that is good for nearly two full years.
There are some complications with trying to do this repeatedly. One problem is that once you are over 5/24, Chase won’t approve you for any additional cards until you drop below 5/24. Another problem is that you cannot get a new cardmember bonus if you’ve received a bonus for a Southwest card in the past 24 months. This latter problem can throw off the ideal timing described above.
Assuming that Jen’s companion pass is good until the end of 2021, the family can start a companion pass rotation that looks something like this in order to keep 2 companion passes at all times:
- Jan 2021:
- Jan’s companion pass is good for the rest of the year
- Husband acquires companion pass good until end of 2022 (by signing up for cards in November 2020)
- Jan 2022
- Jan’s companion pass is expired
- Husband’s companion pass is good for the rest of the year
- Oldest daughter acquires companion pass good until end of 2023 (by signing up for cards in November 2021)
- Jan 2023
- Husband’s companion pass is expired
- Oldest daughter’s companion pass is good for the rest of the year
- Second oldest daughter acquires companion pass good until end of 2024 (by signing up for cards in November 2022)
There are many different ways to do this, but the above suggestion is designed to give extra time for the daughters to build up their credit so that they’ll be more likely to be approved when it’s their time to sign up.
The above plan assumes that the companion pass and associated credit card rules stay as they are today. Of course, change happens regularly and so the plan will likely have to be adjusted to accommodate.
Regular readers know that we are big fans of transferable points programs like Chase Ultimate Rewards, Amex Membership Rewards, and Citi ThankYou Rewards. When you build up points in these programs, you are then free to take advantage of sweetspots, award sales, and other opportunities that pop in in a variety of loyalty programs.
Jen and her husband currently have 150,000 Chase Ultimate Rewards points. We think they should get more. One good way to get more Ultimate Rewards points is to sign up for Chase Ink cards. Chase offers three different Ink cards and all three have great welcome bonuses:
Even though the Ink Business Preferred card has an eye popping 100K offer, that’s not the one we recommend at this time. Chase has been harder on business card approvals lately. And it has long been more difficult to get approved for the Ink Business Preferred than either of the no-fee Ink cards. Plus, the no-fee card offers have much lower spend requirements.
My bet is that Jan and her husband could each pick up an Ink Business Cash card now and that she can pick up an Ink Business Unlimited card later in the year. If her husband plans to sign up for Southwest cards at the end of this year (see the Southwest section, above), then he shouldn’t go for a second Ink card. If this plan goes well, Jan and her husband will add another 150,000 points to their Ultimate Rewards mix (plus points earned through spend) by signing up for those three cards.
Towards the end of this year, their oldest daughter may want to try getting one of those 50K Ink offers too. You can read about how my son signed up for a Chase Ink card as a college sophomore, here: Chase Business Ink as a student starter card. Please click through to read that post for a discussion about how students can apply for business cards.
If the oldest daughter does successfully get an Ink card, she could move her points to her parent’s Sapphire Reserve card account in order to maximize the value of the points. Note that with multiple people in a household wanting to move points, you may have to create a loop. For example, the daughter transfers points to Jan’s account and Jan transfers points to her husband’s account (if her husband has the Sapphire Reserve account, for example). Nick detailed this process in our Ultimate Rewards Guide, here.
Amex Membership Rewards
Jan and her family haven’t yet gone after Membership Rewards points, but we think they should. There are many different cards that offer Membership Rewards points and since each is a different product, it’s theoretically possible for one person to sign up for each and every one. This means that a single person could pull in many hundreds of thousands of points on their own.
Interestingly, a couple working together can pull in more points than two people working alone. This is true because you can get points for referring each other. For example, Jan can sign up for the Business Platinum card and then refer her husband, and then her husband can refer her to another Amex card. With each referral, the person who sends the referral earns a referral bonus (sometimes as high as 20,000 points) and the person who receives it is eligible for a full welcome bonus. For details, see: Maximizing value from Amex multi-referrals.
In general, Jan and her family should concentrate mostly on signing up for business cards since those won’t add to their 5/24 count. That said, we recommended that Jan take a look at the Amex Gold card to see if it is a good fit for her family. With its 4X category bonuses, it’s one of the best point earning cards around for those who spend a lot at supermarkets and restaurants.
Here’s the list of currently available Amex Membership Rewards offers (make sure to click “Next” to see more):
|Card Offer and Details|
There’s so much more to consider about Jan and her family’s situation and how to maximize opportunities. For example, if Jan ends up getting the Gold card (which offers 4X dining), should she consider dumping the one remaining Sapphire Reserve card (3X travel & dining) and instead keeping an Ink Business Preferred as a way to keep 3X travel? But, we try to keep these Card Talk Interventions to about an hour, so we left things where we did.
Overall, I think we helped Jan with concrete plans for cancelling cards, and general go-forward plans for establishing her second daughter’s credit, earning new Southwest Companion Passes, increasing their Chase Ultimate Rewards totals, and amassing Amex Membership Rewards.
Watch the Video
Want to see the complete Card Talk conversation with Jen? You can view it here:
How to participate in Card Talk
If you’re interested in participating in Card Talk, you need to first be a member of our Frequent Miler Insiders group on Facebook. Once you’re a member, you can find Card Talk application instructions here.