The other day I got a question from a reader who said he’d recently accidentally paid some annual fees that he hadn’t meant to because of bad organization. He asked for my system.
As a bit of background, almost every reward card we have has an annual fee. Many credit card offers waive the annual fee for the first year, but after 12 months of having the card, you are on the hook for the annual fee for the second year.
For me to pay $95 or $175 or $450 to keep a card, I need to be getting some great benefits, and I rarely see keeping the card through the annual fee generating positive value. In fact, the only card I have kept recently was the Chase Sapphire Preferred because its 2 points per dollar on dining and travel are categories I use a lot and a 7% points dividend at the end of the year make it my go-to card when I’m not clearing sign up bonuses.
So how do I keep my credit cards straight, so I know when to cancel a card and avoid an annual fee? It’s actually a simple computer-free system. Printed on every credit card is its expiration date. You may have noticed that the month in that date corresponds to the month you opened up the card. So if your card’s expiration date is 12/15, then you opened that card in December.
If you opened the card in December, that means annual fees will be due each December.
I have two places for credit cards–my wallet and my sock drawer. My wallet contains one to three cards, generally cards that I’ll be using that day to meet spending requirements or as a back up. I keep my Sapphire Preferred in my wallet whenever I am clearing AMEX sign up bonuses, for instance, since AMEX cards are not always accepted, and I want to earn points on all my purchases.
In the sock drawer, I put all the cards I won’t be using that day. I order them in a stack from next annual fee date to farthest away, simply by noting the month in their expiration dates. Right now cards with a February expiration date top my stack (because I’ve already dealt with January cards.)
I tend to see the pile once a month or more because it is next to my pile of loyalty cards, which I need to access occasionally. When I see the pile, I decide whether any action is needed on the top card. If not, I ignore the pile. If so, I look through the pile and act on all cards that need action.
For more reading, see Credit Card Cancellation Negotiations.
I have earned millions of points, primarily though credit cards, to travel the world in first class for pennies. This blog will show you how to earn and redeem points to do the same!
Now that it is 2013, when will the 7% CSP points show up? or is it 12 months after opening the card?
The 7% usually shows up in your February statement, since the January statement may still have some charges from the previous calendar year.
Rather than canceling cards, why not just request a fee-free version of that card? In my experience, many cards have a fee-free version. That way, you get to keep the line of credit, and as these fee-free cards “age,” they improve one’s credit score. Is there a down-side to this? Perhaps it impedes churns down the road? Although, it seems like a large percentage of the best bonus cards (with the exception of US Barclays) are not churnable anyway…
It has always puzzled me why people need a tracking system for when credit cards come up for renewal. It is a simple matter of scanning your bill each month and if you see a charge for an “annual membership fee”, you can call or contact them online to cancel the card. If you cancel they will not charge the fee.
@Shari: I’m sure this comes as no surprise, but CapitalOne will not (in my experience at least) remove the fee even if you cancel. You may as well just keep it open for another year.
I discovered recently that this is true. I saw that I had been charged the annual fee on my SW credit card bill and so I called Chase. They explained that if I canceled the card within 30 days of the fee being charged then it won’t go through. Good to know!
As I read the title of your post, I looked forward to some advice, as I sometimes feel a little out of control with my cards. Knowing how analytical milevalue is, I was looking forward to some valuable tips. I had to laugh out loud when. I got to the sock drawer part…
Haha. Not everything has to be so high-tech.
How are u earning miles right now when u r out of the country?
Spending on my Ink Plus, but otherwise not really earning any.
Why does everybody refer to it as the sock drawer?
Mine was literal, though I have now vacated my apt and sock drawer.
I was just applying this and found out the dates didnt match up for my hawaiin airlines cards for some reason. They both have different dates. And both of them are earlier than my application/approval date.
Same here. The HA cards are the exceptions. They’re the first cards I have where the expiration month doesn’t match up with the sign up month.
Thanks for the data points, guys.
I keep my cards in my desk drawer and created an excel spreadsheet. I actually have the credit card numbers and CCV numbers but hid those rows for obvious reasons: http://i46.tinypic.com/21mzvpe.png
I just looked up the image file you posted. On the column named “Date Issued”, it shows you applied for as many as 15 credit cards in 2012. Is your image for real? Did you really apply that many credit cards in 2012? Did this drag down your credit scores?
Shari
I agree I found the fee on my bill then canceled but it good to keep track of things..I think I over did it on the cards 5 in 2 months .I wait 5 months then start again ,then I’ll be down to 3 old ones . .But I have enought points for the year .
Thanks Scott
I
Sorry. Hit the button accidentally. This may be a silly question-and I am trying to read all the posts. But I have had a Delta card for years and continually pay the annual fee and now just received a Southwest. If I cancel how do I continue to accumulate miles?
Don’t pay games with this CALL THEM AND ASK .Citi is very good and chase too .
Carefull gets the $$$$$$$$$
Airline cards like the Delta and Southwest cards deposit the miles directly into your airline account, so you can cancel the card without losing the miles. You continue earning miles after cancellation by opening a new card!
Can you still use the card for a trip if you cancelled it?
If you’ve been a loyal customer of Delta Airlines, they may waive or decrease the annual fee for you. You could always use a different American Express card or the Chase Sapphire preferred card to book your travel. You will still earn Delta SkyMiles as long as you enter your SkyMiles number and the reservation.
Two options that work for me:
1) Toodledo: I’d be dead without it. (http://www.toodledo.com)
2) “Siri, … remind me to cancel my [Name of Card] on [Date].”
I have to admit, I did not expect “when I see them in my sock drawer” to be the advice. But whatever works!
I have an Excel spreadsheet of all cards I have open, have cancelled, am working on the minimum spend for, and those I am thinking about applying for. Two of the cloumns are Approced Date and Cancel Date. When I get a new card, I just make the Cancel Date about 11 months ahead of my Approved Date, then scan that Cancel Date column every month to see if there’s anything I need to cancel.
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I agree , but Low tech got me on the Concorde on 9/5/2003 ,.Phone call @ 5am (no online for that) and a good charge card .. Remember if it works use it .
Cj
Hi, I followed the link at the bottom to:
Credit Card Cancellation Negotiations
which was helpful. But the link in there to a 12 part series doesn’t work. Could you provide a working link to that series? Thanks much.
http://milevalue.com/free-first-class-next-month-the-revised-end/
Thank you!
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