When it comes to credit cards, the only way to accrue massive amounts of points is by collecting a variety of cards, maximizing signup bonuses and then maximizing spending category bonuses. The banks have made it easy to accrue points, but you will be slapped with high annual fees if you continue to hold the same cards for many years. Unfortunately, the process of deciding which cards to keep requires some scrutiny.
The way in which I view the world of travel credit cards boils to down to the question: is it an earner or a burner? Here are my definitions:
- Earner = card that has excellent category spending bonuses matched to your personal top spending categories, carries an annual fee that can be justified each year, and carries other miscellaneous benefits that are well worth paying for
- Burner = card that has an excellent sign up bonus, but does not have any worthwhile benefits to keep the card past the first year (or even that long!)
If you look at this framework, you’ll notice that I excluded the sign up bonus from the earner category. Despite ‘earners’ having sign up bonuses, they often may not make sense as they are often lower than other similar cards, or they carry larger annual fees which are not always worth the upfront cost to acquire.
To decide whether a card is an earner or a burner, I have three criteria I need to answer:
- Does this card offer the best points acquisition option for my spend categories?
- Does the annual fee pay for itself from my basic spending (no manufactured spend)?
- Does the card offer any worthwhile benefits outside of points?
In my case, there aren’t many cards which fit these criteria. If we only focus on travel credit cards which carry an annual fee, I have precisely two cards which fit this mold:
- American Express Gold Card: 4X benefits on restaurants/groceries in the US helps me stash a large amount of Membership Rewards points, my favorite courtesy. The annual fee almost pays for itself with the dining and airline credits, even if I don’t use them fully. I spend a lot in these categories.
- Chase Sapphire Reserve: 3X on travel worldwide is a no brainer, and it carries two lucrative perks: trip protection/cancellation and primary rental car insurance worldwide. These benefits make me hold onto the card year after year.
In culling together this list, I was a bit surprised by the brevity. I also have a variety of ‘earners’ that I carry, but most are no-annual fee and do not require scrutiny in the keep, downgrade, or cancel decision. No annual fee card which fit into the earner framework in my portfolio include: American Express Blue Business Plus Card, Chase Freedom Unlimited Card, and the Chase Freedom Card.
The more interesting side of the equation is what I consider the ‘burners’ in my card portfolio. These are cards that banks created to generate interest and card acquisitions, but do not offer enticing enough benefits to warrant any further spend. The majority of the cards I sign up for fit in this bucket. Here are my most recent ones which I plan to cancel in the next year:
- American Express Hilton Aspire Card: This card comes with a decent bonus and ongoing perks such as a $250 resort credit, $250 airline credit and DIamond status, but I don’t find myself staying at Hilton properties. The credits are difficult to use, and thus I won’t be renewing for the steep fee of $450.
- American Express Marriott Bonvoy Boundless Card: I opened up a new account in August for this card before then upgrading an old SPG card to this same card. I have two of these cards open currently, and plan on cancelling one of them. The sign up bonus of 100K Marriott Bonvoy points is great, but I don’t value the ongoing perk of a 50K point free hotel night more than a new potential American Express card I can pick up by dropping a credit card.
- Barclays Arrival Plus Mastercard: Despite this being essentially a 2.1% cash back card for travel, I don’t see the advantage of holding onto this card. It pales in comparison to the American Express and Chase products. The 70K point bonus is nice, but that’s about it. A total burner in my book.
- Barclays AAviator Red Card: Barclays is the second bank to partner with American Airlines, which means ever more miles can be acquired to fly the airline! Good news is another 60K bonus for $1 worth of spend, bad news is another crappy card in your arsenal that you are desperate to cancel.
- Chase IHG Card (old version): This card went from having a solid bonus and an extraordinary annual benefit, to now having only a mediocre benefit of a one night stay in an OK hotel. I personally don’t like staying Holiday Inn properties, and good luck finding an Intercontinental that will accept a reservation for the equivalent of 40K points per night.
- Chase Marriott Business Card: I acquired this card before the ‘5/24’ rule became a thing. Ongoing perk of a 35K point free hotel night worked out for me great this year, but I doubt it will continue to add value as the Marriott Bonvoy program introduces peak vs off-peak pricing.
- Citi AAdvantage Platinum Select: Can I even count how many of these cards I’ve acquired in the last three years? No. But that’s beside the point. This card has an amazing welcome bonus in the 60-75K range depending on when you sign up, but it offers zero incentive to keep past year one.
As shown above, the majority of the cards I hold don’t really make it past year one for a variety of reasons. I will continue to hold just a few true ‘earners’ with annual fees, and many ‘earners’ without annual fees that I can hold onto into perpetuity.
More importantly, I hope this framework can help drive some of your own personal decisions as it relates to which cards are true ‘earners’ for your travel goals, or ‘burners’ that serve a specific purpose and then can hit the road.