Credit Cards: Keep or Cancel?

Credit Cards: Keep or Cancel?

 

Should you keep or cancel credit cards that earned you a great signup bonus but which you don't use for everyday spend? I'm making this decision now with a slew of credit cards, and here are the factors I use to help decide, along with concrete examples of what I plan to do with each of my active cards.

  • Travel Goals, and Which Frequent Flyer Miles and Loyalty Points are Most Valuable Given Those Goals
  • Annual Fee?
  • If an Annual Fee Card, Do the Card Benefits Justify the Annual Fee?
  • Is There a Retention Bonus, and Does That Justify the Annual Fee?
  • Is There an Opportunity Cost in Holding the Card–Would I Be Better Off Churning It?
Context: Our Goal for our Miles and Points is First and Business Class International Travel
The first overarching thing to think about is what your travel goals are, since that drives your frequent flyer miles and points earning strategy. Some folks want to travel as much as they can, and are perfectly happy in coach. That is not our goal. My husband has limited vacation days, and we like to utilize them for international first and business class travel, for example in Singapore Suites, Cathay Pacific First Class, Etihad First Class, Lufthansa First Class, etc.
 
On the flip side, we don't care much about hotel loyalty points, with the exception of SPG points, as those can be lucratively transferred to many airline miles with a 25% bonus, when transferred in increments of 20,000 points. The reason we don't care much about hotel points is that the best hotel products are not available with points. We would rather save thousands of dollars off airline tickets and use that towards stays at Aman Resorts, Four Seasons hotels and resorts, Mandarin Oriental hotels, and the occasional boutique property. We enjoy all the perks of hotel loyalty programs via my VirtuosoFour Seasons Preferred Partner and other luxury hotel affiliations, with none of the hassle of staying at only one chain or of doing mattress runs (staying at a bunch of low cost hotels in the chain, just to attain or maintain status).
 
 
Why It's Worth Keeping Credit Cards You Rarely Use, If They Carry No Annual Fee
 
You might assume it's best just to cancel credit cards you rarely use, even if they don't carry an annual fee. I recommend NOT doing this, because 15% of your credit score is attributable to the length of your credit history. This means that you want to keep your oldest credit cards, since they help lengthen your average age of accounts and counterbalance the negative effect of closing cards you've only had a short time. Even after you close a credit card, it *can* stay on your report for up to 10 years, but it may not stay on that long, and after it is removed, all that history is gone.


My Current Active Credit Cards: Keep or Close?


1. Alaska Airlines Visa 
 
Annual Fee: $75 fee, not waived the first year
 
I just got approved for the Alaska Airlines Visa with 50,000 bonus miles and haven't even received the card yet, so I'll naturally be keeping this and meeting minimum spend to earn the miles. Even if you recently applied for this card with a lower bonus, you may be able to match to this higher offer; see Bank of America Matched Cardholder to Alaska Airlines 50,000 Bonus Miles Offer.
 
Verdict: Keep


2. AMEX Business Gold Rewards Card

Annual fee: $175, waived the first year
 
The only reason to get this card is if a good signup bonus comes along, especially if you already have the AMEX Premier Rewards Gold card to earn 3X points for airfare spend. Ok, that's a little harsh, and I suppose if you have a business that has a ton of shipping or advertising expenses the 2X category for those could come in handy.
 
But the other reason I'm definitely canceling this card is the opportunity cost: AMEX has made it harder to get the bonus again unless you've not had the card for a full year, so basically the sooner you cancel, the sooner you can set the clock ticking to earn the bonus again.
 
Verdict: Cancel


3. AMEX Platinum Card

Annual fee: $450, not waived the first year
 
Again, the reason I got this card was the short lived 100,000 point bonus earlier this year (see AMEX Platinum 100K Signup Bonus Offer) and because it's possible to earn back the cost of the annual fee thanks to $200 airline incidental credits, total of $400 since the credit is per calendar year (see Maximizing the AMEX Platinum Airline Fee Credit). It was also great to be able to get the $100 Global Entry fee reimbursed (see American Express Platinum Card Global Entry Benefit Tips). 
 
That said, I don't use some of the other touted benefits, such as the Fine Hotels & Resort program (you're better off booking with TravelSort or another trusted Virtuoso and Four Season Preferred Partner travel advisor) and this is not a good card for everyday spend–you'll do better with the category bonuses of other cards, or with an SPG card for otherwise non-bonused spend.
 
Also, don't forget that in light of the US Airways American Merger, all Platinum card holders are losing access to the US Airways Club and American Admirals Club lounges as of March 22, 2014. Sure, AMEX has a couple nice Centurion Lounges in Las Vegas and Dallas, with more in the works for San Francisco and NYC LaGuardia, but these don't make up for losing access to all American and US Airways lounges.
 
Verdict: Cancel
 
 
4. Chase Freedom

Annual fee: No annual fee
 
This is a no brainer to keep due to no annual fee and the 5X categories, although as I wrote in Chase Freedom 2014 Calendar 5X Categories: Disappointing I won't be maxing out the 5X categories next year. I'm also not happy that the old Chase Exclusives program was terminated even for grandfathered members. While the Chase Freedom used to be my go-to card for everyday small purchases, it mostly collects dust now until a worthwhile 5X category such as 5X for dining comes along.
 
Verdict: Keep (no annual fee and the occasional good 5X category)


5. Citi AAdvantage Cards

Annual fee: $95 annual fee, waived the first year
 
I got a couple more of these cards during the window earlier this year when it was possible to apply for 2 Citi Platinum Visas in 8 Days. Needless to say, this is no longer possible, and churning has gotten a lot harder. AAdvantage miles are incredibly valuable now, in light of the United Devaluation, which has had the effect of devaluing both United miles and Chase Ultimate Rewards points, since United MileagePlus has been the highest value transfer partner. It's only a question of time before the American AAdvantage award chart devalues, so start planning a high value use for those AAdvantage miles.
 
Verdict: Keep until 10 month mark or so, then try for a retention bonus or cancel
 
 

6. Hawaiian Airlines Visa from Bank of America

Annual fee: $79 fee, not waived the first year
 
Originally I got this card because I planned to transfer Hawaiian miles to Hilton HHonors points prior to the devaluation, but since the miles didn't post in time, I'll likely just redeem them for island hopping in Hawaii on Hawaiian Airlines. Island Air is often cheaper, but it's also less reliable, so I prefer to fly Hawaiian between the islands, even though I never fly Hawaiian from the U.S.–the hard product even in domestic first class is abysmal.
 
Verdict: Cancel before annual fee comes due


7. Hilton HHonors AMEX

Annual fee: No annual fee
 
I got this card simply for the access to AXON awards and the 40,000 HHonors bonus points, prior to the massive Hilton HHonors devaluation earlier this year. See Hilton HHonors: Use Citi and AMEX Credit Cards to Maximize Points. In the course of planning one of our 2014 trips, we found a good use for a pre-devaluation AXON award, although of course we'll also be staying at a Four Seasons in the vicinity which we're looking forward to even more.
 
Verdict: Keep, since there's no annual fee


8. Hyatt Visa
 
Annual fee: $75, waived the first year
 
If you don't already have this card, be sure to read my post Hyatt Visa Still the Best Hotel Credit Card Bonus Offer: 2 Free Nights + $50 Statement Credit Offer Thanks to my husband and I both getting this card, we enjoyed 4 complimentary nights at the Park Hyatt Maldives. We didn't have any good use for the annual free night at a Category 1-4 Hyatt, so my husband has since canceled his card, but I kept mine and was able to redeem the anniversary night at one of the hotels I mentioned in Hyatt Visa Annual Free Night at Category 1-4: Top 7 Hotels. So, I just may keep this card after all, and of course request a retention bonus.
 
Verdict: Keep, but request a retention bonus



9. Ink Bold

Annual fee: $95, waived the first year

All of my business spend goes on the Ink Bold, and it's very useful for getting 5x points for all Amazon spend, 5X on all Whole Foods spend, and other 5X spend using gift cards bought at office supply stores. I also like that as a business charge card, utilization doesn't impact my credit score at all, since only personal credit card utilization is reported to credit rating agencies.

Verdict: Keep, but request a retention bonus

 

10. Ink Plus

Annual fee: $95, waived the first year
 
I got this primarily for the signup bonus, but it replicates the Ink Bold in terms of benefits, with the only difference being that it's a credit card instead of a charge card.
 
Verdict: Cancel, unless retention bonus makes it worth keeping another year
 
 
11. Lufthansa Miles & More Card
 
Annual fee: $79, not waived the first year (but I got mine waived, thanks to HUCA)
 
I recently got this card for the 50,000 Miles & More bonus, which will come in handy, in conjunction with some transferred SPG points, to be able to book Lufthansa First Class in advance. Recall that there are no Lufthansa First Class awards at all with US Airways and that United and other Star Alliance partners can't book Lufthansa First Class in advance; at most you can book Lufthansa First Class 15 days in advance
 
Verdict: Keep (just recently got this card)
 
 
12. Starwood Preferred Guest Business Card
 
Annual fee: $65, waived the first year
 
Keep in mind that you can simply alternate getting this card and the personal SPG AMEX, if you want to churn them and keep earning the bonus, since the welcome bonus is NOT available if you've had this card in the past 12 months. That said, some folks find it worth it to pay the annual fee and have both cards, because you receive 2 stay credits with each card towards elite status. I've previously been SPG Platinum and more recently SPG Gold, but I'm not planning to requalify for SPG Gold for next year as I have only 1 planned Starwood stay and am looking forward to stays at nicer resorts than Starwood offers 🙂
 
I will say that it was handy to be able to receive 5% cash back as statement credit and combine it with 10% Off Hyatt Check Certificates and Gift Cards, but I'm so well stocked up on these that I don't anticipate needing that discount until the next time I apply for this card (preferably when there's a 30K bonus, instead of the usual 25K bonus)
 
Verdict: Cancel (opportunity cost of holding it; prefer to churn the card to earn more SPG points)
 
Which credit cards do you plan to keep or cancel?
 
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