I thought this would be a fun exercise. I took the spreadsheet where I keep all of my credit card information and calculated the marginal benefit of each of my cards. In other words, I wanted to answer the question “how much benefit would I lose if I closed a particular card and used the next-best option in each category?”
Note that these are marginal benefits, not total benefits. So, for example, my US Bank Altitude Reserve earns me about $644 annually in grocery rewards, but it only gets “credit” in this exercise for the amount by which it beats my next-highest grocery card.
This analysis calculates direct costs and benefits only. Points are valued at 1.5 cents for Altitude Reserve, 1.3 cents for TrueBlue, 1.13 cents for HawaiianMiles, 0.6 cents for Membership Rewards, and 1 cent for Venture Miles. Cards were “penalized” for their annual fee but credited for direct statement credits. Lounge access was not given any value.
Here’s what I found, in descending order of net benefit:
Profitable cards
$298 - US Bank Altitude Reserve (Groceries, Mobile Wallet, Non-Portal Travel)
@Mia
Yup. Each one of my spending categories has 2 or 3 viable backup plans if the primary card were to get nerfed or I needed to switch it out for some reason. And it makes applying for new cards come down to miniscule benefits like “bumping my dining-when-mobile-wallet-isn’t-accepted” earning from 3% to 4% for a net benefit of like $10 a year.
@EdwardGenesis
Where do you see the cutoff here where the marginal return feels like it isn’t worth managing another physical card, another statement, another due date, etc.?
I have three cards. Optimizing it feels seductive but I can already feel like I’m past the point of easy improvements.
For CB is the recipe simply – one catch-all, one max cashback on your largest category spend, and one with various 3% categories?
@Drue
I enjoy this as a hobby so the tinkering and optimizing is fun for me. Everything is set to auto-pay so the daily management is relatively hands-free.
But yeah you basically have the idea. Sort by your highest categories of spend and just start chipping away until you have 5% on as many of them as possible.
Altitude Reserve is my newest card and if I had gotten it sooner I probably wouldn’t have gotten many of the others. Effective 4.5% on mobile wallet is so powerful that it makes just about everything else obsolete.
Amex Blue Business Cash has no annual fee, why will it be in the unprofitable bucket?
I find the BoA Premium Rewards to be a great card as catch-all and dining when Apple Pay is not accepted. If you can make use of the $100 airline incidental credits, it can be a very profitable card to keep.
@finn
“Unprofitable” doesn’t necessarily mean “negative,” it just means “zero.” The only negative-value card I have is Business Gold.
Alliant is a 2.5% catch-all, so that beats both BBC and Premium Rewards in any non-Mobile Wallet catch-all scenario. In theory I could keep Premium Rewards open for the incidental credit but I already have the Venture X credit and Altitude Reserve credit, plus free checked bags on both JetBlue and Hawaiian Airlines.
@EdwardGenesis
Every time a BoA card is mentioned, I automatically assume the user has platinum honors, which will give you 2.625% catch all and 3.5% dining with Premium Rewards. Agree with you if it’s not the case.
@finn
Got it. Our state’s 529 plan and my employer retirement plans are all with Fidelity so I use them as my brokerage. I looked into moving things over to BofA recently but it wasn’t worth the friction.
@EdwardGenesis
AMEX Biz Gold is great with Pepper App. Take a look on DoC. Amazon, Walmart, Cabela’s, Lowe’s, Wayfair, DoorDash, Uber, when bonus boost.
@finn
And $100 flight credit is easy to use, you were going to spend that much anyway. Whereas a $300 credit or whatever the higher AF cards have may have you buying some just upgrade just so you don’t lose the money.
Even if you are winding down and just cashing out points at less than 1cpp you may as well open an Amex checking account temporarily (which has a $250 SUB of its own btw until Oct 31st) to cash out at 0.8cpp instead of 0.6cpp.
But yeah, understand the math may still not make the Business Gold profitable. You’d have to put a lot of spend on that card to make it worth it, and it would never be worth it for you if you value the points at 0.8cpp.
Lounge Access always has a dollar value to me depending on how much free alcohol I drink. Though the cost of making a flight somewhat enjoyable due to the alcohol, now that you cannot put a price on.
Oaklan said:
Lounge Access always has a dollar value to me depending on how much free alcohol I drink. Though the cost of making a flight somewhat enjoyable due to the alcohol, now that you cannot put a price on.
I think Venture X and USBAR both have Priority Pass, so in a marginal value model, Priority Pass lounge access (up to the USBAR cap?) should have zero value. Depending on the airport, I think it’s pretty plausible that’s all the lounges used.
And what this doesn’t factor in is your time and mental energy you spend managing multiple cards.
Also these bonuses may drive unnecessary spending from buying gift cards to just adding something to an order that you were on the fence about - those extra fries, that additional appetizer.
Interesting exercise, but have some questions on the methodology.
How are you calculating the benefit? Are you valuing any non-statement credit based benefits? Are you weighting the statement credits for your actual usage?
Also, for Amex MR, 0.6cpp is a bit harsh valuation. Yes that’s the base cash rate but that’s not really what they are for and can be redeemed for much higher value with transfer partners. But even if you don’t want to do that and only want cashback you can get 1.1cpp via the Charles Schwab Platinum, 1.0cpp via the Morgan Stanley Platinum, and 0.8cpp by opening a free Amex checking account.
@Mars
On the cards I have, I use all of the credits organically. For something like free checked bags on JetBlue, I value those conservatively as the price of two round-trip checked bags per year, which I easily use.
I don’t value benefits like rental car insurance or cell phone insurance because they’re ancillary and I would never keep a card open for just those things.
Over the past three years I’ve churned Amex Green, two Golds, Platinum, two Business Golds, Business Platinum, and two Blue Business Plus, not to mention a handful of upgrade and retention bonuses along the way. I’m well aware of the transfer partners and how to get more value than the cashout rate. But my wife and I have now earned just about every MR SUB you can possibly get, so there are no more big paydays on the horizon and now it’s about winding down my presence in that ecosystem. I’ve redeemed over 1 million HawaiianMiles through Amex transfers and I’ve gotten my value, but none of their cards are worth keeping around for me long-term so I’m just ready to tap out. I live in a rural area so all of the credits for things like Uber or GrubHub are worthless to me. BBP was the only MR card I considered keeping around, but Altitude Reserve as my new catch-all has made that obsolete as well.