My strategy to credit card management has changed substantially over the past year, here’s a few things that I do differently.
I don’t call for retention offers
Cards are keepers, or they are not. I have a foundation of fee free or permanently waived cards (grandfathered in Citi via the old Citigold program). These I keep. If there is a card with a fee that I want to keep, it must be producing considerable monthly income. If it is doing that, I don’t want to ask someone to put eyes on the account to save $100, I just eat the cost. The $100 is a tribute to the MS gods, I should make it up within the month.
I don’t call in to expedite pending applications
I recently posted in the forum how you can get a few different types of ‘pending’ from the same card some seem more likely to be processed than others, but in any case I’ve decided to no longer call in until they’ve denied me. This is a change from when I used to call in whenever there was a chance of being denied. The logic here is that reports from a number of sources (and personal experience) show that the reps don’t like this behavior any longer. There’s too much exposure, too many people calling in, and there seems to have been a policy change due to it. In other words, I think that calling in to expedite increases the chance for denial.
I don’t downgrade to a fee free, I cancel
I know you’re not supposed to cancel because it reduces your credit score, but once you start to top off total credit (many times salary) you’re better to cut your credit down than try to argue your $1M of credit line with $100 in use makes you a good candidate for a new card. Credit card companies look at total risk from the relationship, and this kicks in at higher levels.
I always pay the (first) annual fee
Some folk out there are canceling a card almost immediately after getting the bonus, meaning they get the fee back and keep the points, this one is just personal preference, but I think it’s outside of my comfort zone. I’m happy to pay that first annual fee, and if the card is a producer, pay the second also.
The first 3 points are things I’ve done a 180 on based on disturbances in the force, the last I’ve always done. If you are a newbie to points and miles, and seeking to build and establish credit, some things should be tackled differently, but if you are an old pro, it might be time to look at your habits and see which ones need to change with the times.
I think downgrading depends, I’d always downgrade a CSP to CF for example, because the no annual fee card is actually useful. Same with BofA & the BBR card. I aggressively go after retention bonuses as well, when you’re hitting them more than once at AF time it can make a big difference and some of the bonuses are ridiculous.
It really depends what you are doing. I have a CF and use it for 1x but that’s no different from a CSP.
I particularly agree with closing accounts. What’s the point of trying to hold onto $10k of credit line when you have $175k or more across all accounts? I’d rather have an instant approval in the future than have to call in and move credit around to get approved for a card app.
Yep.
I would disagree with #1, since the people who handle retention offers most likely are not the same ones who deal with MS abuse. Some cards need to be opened even though they’re not doing anything, like the Citi AA personal cards, where it’s now best practice to keep them for 18mo before applying again.
Like I mentioned, my citi cards are fee free forever so I don’t worry about those.. Also, I’d argue you are disagreeing because you hope that’s the case. I’m just not bothering to take the risk they are.
We never know for sure, but evidence from several of my cards points to the right and left hands not knowing they both exist at most banks. You can live in fear if you want….up to you.
And are ALL your Citi cards fee free forever, even new ones you’d sign up for now? Now that AA cards require no account opening or closing for 18 months, it requires keeping them past the annual fee.
Live in fear?
yes…in fear. How else can you call missing out on retention offers for fear of a very slight chance that someone might see your account and shut you down?
Most cards prime for MS abuse aren’t once where annual fees or retention offers matter anyway? Like I said, and you keep ignoring my question….what’s wrong with calling in about the Citi AA personal cards when annual fee hits and you need to keep it for another 6 months to hopefully qualify for the bonus again?
It feels a bit passive aggressive as a tone. Dial that down. As for what I call it, I call it looking at the big picture and not sweating $100 when you’re clearing a lot more than that.
So will you let me know what’s wrong with getting the Citi AA card fee waived or just keep ignoring that question?
I look at big picture too, and would for example keep open and keep paying the Arrival fee if Amex GC cashback ever comes back, but for some cards where nothing happens it’s worth a call.
I’m not trying to ignore your question, you need to understand the post is ‘four things that I do differently’ meaning – here is what I do. In my world of MS there are no fees for Citi so your question is kinda moot.
Additionally, I don’t MS on citi, so if I really wanted to waive a fee that doesn’t exist I might try (because eyes do no harm) but broadly speaking I don’t care and I just cancel.
To your point on the arrival, the wife’s fee just hit, but I also accidentally earned about $800 in cashback on it last month.. so I’m not going to call in. I hope you can read between the lines based on the post and the other comments that there might be other things going on that you aren’t aware of.
I think you make a great point on paying the annual fees. There are some that take travel hacking to extremes… Sometimes you need to accept that there are fees you need to pay, but the gains often exceed the cost. e.g sign on bonuses, category spend (for those cards worth keeping).
I myself call in for retention offers, although not to extremes, but I can see how that is tempting, given the increasing reports of larger bonuses (e.g 5x for 3-6 months, etc.)
As far as the closing vs. downgrading, that’s an interesting one that I think folks that have been in the game a while are starting to run up against (or have in the past).
I agree with all of the above. Husband just got the targetted Citi Premier, with 100K TYP. He nearly had a heart attack when he saw the AF. But, going over the yearly benefits, I pointed out how we could actually save significantly more than the AF by using it wisely.
The AF is waived for the first year. We’ll see if his heart is still strong, next year.
Nice – is that the one with the $250 airline credit on calendar years? Might want to act fast to get it for 2015 then again 2016.
you are referring to the prestige not the premier correct?
The downgrade depends… I had downgraded Citi Exective to Dividend card and keep it for 5x quarterly. One thing I preferred was to downgrade and lower CL to a minimum for quarterly bonus spending, thus to free up total CL for other new account.
I never downgrade either, cancel and move on.
Have only downgraded to the BBR from Alaska. Unable to do this any longer. Most downgrades aren’t lucrative and you are still retaining your CL which can be a disadvantage when applying for a new card with the same issuer. Others above have posted on this. Many advantages to cancelling. I have called for retention offers but I often feel a bit slimy after taking the issuer to town for the bonus and then cancelling a year later. The issuer has already taken a hit and trying to negotiate another retention bonus is a bit aggressive, can possibly peg you as a problem, not sure. But all this aside some like the game no matter what, ethics aside. I think the bloggers thoughts are refreshing and really have minimal impact on your bottom line for bonuses and approvals. I know many take a hostile/adversarial position against issuers. So be it but for me I sleep better at night trying to be reasonable. It’s worked. No FRs or blacklisting and 3.5 million points/miles in 3 years and loads of free travel. Issuers have been more than generous IMO.
I have cards that I MS on (Citi and BoA mainly), and cards I don’t (Chase, Amex). In general I keep a CL total of no more than 1/4 to 1/3 of my AGI at any one issuer. I call Chase every few months for retention offers because I no longer can get any new ones, but the ones I have provide occasionally useful benefits, and it’s nice to keep them in the sock-drawer for little to no cost. For Citi and BoA as I am MSing those heavily I no longer call retention as I too don’t want eyes on the accounts. Since the risk is unknown that the retention may look at spend patterns, and the downside of the risk is too high, I, like Matt, prefer to pay my annual tributes 🙂
I don’t always finance my vacation travel harvesting credit account data from co-workers’ trash baskets, but when I do I fly business rather than first-class to stay under the radar.
I agree with all of your comments. It seems to me that we are getting a huge return from our credit cards, that the game will go away if too many folks don’t let the credit card companies make a little money. I enjoy reading the bloggers who are MSing huge amounts but it doesn’t seem to be quite ethical IMO.
Trust me. The credit card companies are making a serious money. That’s why they allow us to play the game even they know everything from the travel hack bloggers.
Hi Matt:
Could you tell us if it is possible to use the travel expenses bonus offered by cards like Barclays Arrival by purchasing gift cards on AA website, for instance.
Thanks,
Nik
Sorry but I don’t know, tends to be related to who processes though- so if the transaction completed on AA website it’s more likely, but if you are sent to a points site then less likely… Frankly never heard of anyone doing this.
Matt,
Your approach discussed above, is something that agrees with my personal risk tolerance. You mentioned at the end of the article, that your approach would be different if you were new to this process. Since I am new as of the last 3 months, I am interested in your thoughts for those recently entering the arena. Do you have articles pertaining to that perspective?
Hi Lynn
I do have some, I’ve written in the past about retention and product changes. The big thing really is to get past the point where closing cards is more harmful than changing them- if you are starting out you need a certain foundation of credit that maintains average age of account and credit utilization.
Once you have this stabilized, you can move on to more of what I’m doing here.
Do you still pay the first annual fee if it got waived the first year i.e., hold new cards for 2 years if the annual fee is waived the first year? I wasn’t sure if you meant that, or just that you pay it for cards where it isn’t waived the first year. In the next 6 months I’ll have annual fees due on a bunch of cards, and quite a few I feel borderline about keeping, like the CSP. I have a few definite non-keepers but where I got a generous sign up bonus, I’m slightly inclined to give the rest another year to see to what extent I use the benefits (e.g., free bag) and what random promos come up that offset a chunk of the fee (e.g., those visa checkout deals.)
No, I pay the first if it isn’t waived.
I’m a bit confused about one of the comments above – you have to keep a Citi card for 18 months before canceling? Is that accurate? That is not how I understood the 18-month rule.
There’s verbiage out there now which states you can’t apply if you have opened or closed a card in the last 18 months. It’s appended to the specific offer.