The title rhymes! I did intentionally add the word “respectfully” because I don’t want my post to come off as hostile in any way. Drew has contributed so many original, helpful posts and I have linked to his blog on many occasions. No one can dispute that he gives 100% when it comes to his content and never “mails it in.” I respect that.
Yesterday, I was reading his post Best no annual fee travel credit card strategy and this quote is what made me write my rebuttal piece:
“The craziest thing is that you can justify every card. “Well, the Hyatt card gives me a category 4 night, so that could save me some money later.” I won’t go into details, but it’s absolutely stupid logic. You could be getting more free nights in two years and saving tons of money by canceling after 12 months. Yes, you are spending more money and actually getting less benefits. Because the annual bonuses are never as good as the sign up bonus.”
There is no question that canceling a card and then signing up for it in order to get the bonus again will give you better ROI. After all, getting 2 free nights (after spending only $1,000) sure beats paying $75 for just one (less fancy) hotel night. In a perfect world where everyone has the same goals and churning ability this logic certainly is indisputable. But that’s where the flaw lies, so let me point out several issues:
- Drew said in the same post that he has Chase IHG MasterCard and has no plans to cancel it. How come? The bonus on that offer is nothing to sneeze at, as you can get 80K points if Chase matches you to the better offer. And the card is churnable just like Chase Hyatt Visa, as long as you haven’t received the bonus in the last 24 months. That tells me that Drew feels that a night at a category 1-4 Hyatt isn’t worth $75 renewal fee on Chase Hyatt Visa. Fair enough, but is this the case for everyone? For many, most certainly. If you live in Midwest, rarely travel, the closest Hyatt only goes for $80 per night and you don’t really care for location, then no reason to hang on to the card. If you are a frequent traveler, live in Florida or near a major city, it’s probably worth it. See my post for more. My cousin-in-law just spent two nights at Hyatt Regency Coconut Point over Labor Day holidays. The hotel was going for over $400 per night. So yeah, paying $75 was a good deal in my book. The place was full as were most other resorts in Florida, so Priceline would be of very little use. Of course, if you are like Drew who is an avid BRG user, no hotel will ever be a spectacular deal, so it’s all relative, I suppose. No sarcasm, I promise.
- None of us know what our credit score will be like in the future. Another unknown is what kind of policy Chase will have in regards to credit approval. The rules have been tightening as far as UR points-earning cards are concerned. Eventually, the same policy may trickle down to co-branded cards such as Hyatt Visa.
- We are all unique. Not everyone is comfortable getting cards, canceling them and re-applying. Once again, I’m not saying that this strategy won’t yield the best possible results, but rather that we all have different goals. Personally, I like to concentrate on cash back and miles. That’s why I don’t mind hanging on to cards like Chase Hyatt. We are infrequent travelers, so it’s a nice way to passively accumulate points and hotel certificates. I’ve said before that I plan to renew Club Carlson Visa because buying 40K points for $75 is a good deal to me. It certainly doesn’t mean that everyone should follow my lead.
- I don’t think it’s imperative to cancel Chase Hyatt Visa before the first anniversary. Why? Your ability to get another bonus isn’t tied to cancellation date but rather the date when you have received your previous bonus. So, if you are planning to go to Maldives, Sydney, Tokyo and yes Paris, sure, it makes sense to cancel the card and reapply. But there really is no rush to do it beforehand. Unless, of course, you won’t be able to utilize the renewal certificate.
Once again, my goal is not to belittle Drew’s argument, but rather offer a different perspective. Readers, what are your thoughts?
Author: Leana
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
I guess the way I look at it: what is the likelihood that I can get a greater ROI from the card benefits for my own needs/travel habits? Is it nearly certain that I will break even (and gain an intangible like hotel status) or get outsized value from the benefits that is more than the annual fee? If the answer is yes, then I probably keep it. The IHG card is a great example. I got it several years ago when they had an 80K signup bonus. In general, IHG properties are probably not my first choice but they are ubiquitous and even staying an odd night at a small town HI Express you probably are getting more than $45 value for your free night cert. The Marriott Visa, on the other hand, I dropped due to category devaluation and increased annual fee (when I signed up, the fee was only $65 and remained that way until last year). I increasingly found myself struggling to find Marriott cat 1-5 properties where I’d want to stay on vacation. For example, I’d visit a major tourist destination and often find that the only available property was a cat 5 Fairfield Inn at the airport or some other far flung location away from the main tourist activities. For me, the value proposition was no longer there so I parted ways. It becomes a bit trickier when you try to cancel. I have a few of the Citi AA cards that basically offer the same benefits. I have tried to cancel them every year but Citi has always offered to pay me $10 to keep the card and added a 1000 mile bonus per billing period if I spend X amount in that period. I’ve kept the cards and enjoyed 2X AA miles up to those amounts but since I have duplicate benefits I think I’m going to cancel next time, wait 18 months, and get another signup bonus.
@Erik I think very much the way you do! I keep Chase IHG card for the reasons you’ve mentioned, and canceled Marriott Visa as well. The value for me just wasn’t there when it comes to the latter. The Citi card situation is a bit more tricky, I agree. I would probably keep it as long as I had economy American flights coming up in a near future. Otherwise, it’s better to reset the clock on the sign-up bonus. The Hyatt card is fairly valuable for Floridians since there are several beachfront properties where you can use the renewal cert. Those are a huge hit with my kids!
Being financially conservative (such as holding onto existing cards when you break even on fees/benefits) is not stupid. There are positives to both approach and what fits his lifestyle is not necessarily what fits everyone’s lifestyle. I love Travel is Free’s blog since it gives me lots of ideas I might not otherwise come up with on my own, but (just like with any blog), I don’t agree with everything he writes. That’s not a dig on Travel is Free — blogs are opinionated pieces of writing and it would be impossible to agree with everybody, every time.
@Becky Thanks for chiming in! You and I are very similar in our way of thinking, that’s probably why I was drawn to your blog. You are absolutely correct, blogging is very personal. We all express our opinions. Some are right, some are wrong, some are both! That’s what makes it interesting. I kind of like opinionated bloggers, probably because I’m one of them. Drew is one of a kind, and I mean it in a good way.
I’d add another point: maintaining your relationship with issuers. i like the idea of being on the phone with Chase and the rep not falling off her chair in shock at my usage/churning habits.
We are waiting to hear back from lenders right now on a home loan. I am anxious to see if our 1 year hiatus from apps was enough to save us from scaring a mortgage lender off or into higher rates. We’ve kept all of the cards that have come up for renewal over the last several months for consistency’s sake. There’s plenty to be said for a non aggressive yet deliberate approach to earning.
I think it’s also unrealistic to travel every month when you have a family. Between a brief sickness and a death in our fsmily, my son is already at all of his excused days off. Weekend trips are dine, but it’s hard to justify using the same amount of airline miles for a 1 or 2 day trip that tku would use for several days or a week. The value of staying home and planning a few trips definitely increases in our situation.
Also, maintaining a yard and a home. I still think hobbyists have horribly messy yards and homes.
So, the constant high risk style of Drew is just not worth the squeeze. For many of us.
But im glad someone is doing it so I can sit back and learn.
@Cheapblackdad First, I’m very sorry you had a death in the family. I’m sure it’s a tough time for all of you. My condolences.
You make a good point about maintaining a good relationship with your credit issuer. You never know if credit approval algorithm will change in the future and those 12 new cards will come and bite you in the behind. I always recommend people are wise when choosing offers, especially with a bank like Chase.
I do think your mortgage app will be fine. If they get spooked and question you, just explain that you wanted to apply for cards in order to collect rewards for travel with your family. No need to mention the words “churning” or The Hobby. Especially the last one! 🙂
I really like Drew’s blog and all the incredible info he provides. He is a huge asset to this hobby, excuse me, The Hobby. But you are right, his situation isn’t typical. Still, we can all learn a thing or two from his posts.