I’ve got a bit of a problem with credit cards and I’m hoping that by getting this off my chest, I can do something about it. Now, I know that you’re probably thinking “gasp…a personal financial blogger has a problem with credit cards?!?”. Yes! Even the rock stars of personal finance can have issues. However, it’s probably not the issue you’re thinking of – I’m not in any sort of credit card debt. The first and most important rule of using credit cards it to not go into credit card debt. Credit card debt is an expensive and slippery slope that can be difficult to get out of. Compounding interest is a POWERFUL tool, but only when it’s working for you – not against you. My problem is that I’ve currently paying too much in annual credit card fees – $959!! 

How I got into this situation

As I write out the number $959, that really jumps out at me and feels like a lot. In reality I knew that I was paying that much each year, but I never really thought too much about it, and didn’t try to add up the number all at once. 

It’s probably no secret if you’ve read the blog for a bit now, but Mrs. Money and I LOVE to travel. It’s where we spent a lot of our ‘fun’ money and where we got a lot of our enjoyment. We dreamed about travel, planned travel, enjoyed the process of travelling, and of course enjoyed the destination. For a while there, pre-COVID and pre-BabyMoneyFinance (well even for a bit with BMF), we would travel a lot. Pre-COVID I travelled a lot for my job and although it slowed down right before COVID, I was still doing a trip every month or so. With work travel comes travel points, and I accumulated a pretty nice chunk of airline miles and hotel points. To supplement, I had travel credit cards for earning additional points, as well as additional perks to make the travel both more frequent and enjoyable. My small wallet grew bigger as I found it hard to say ‘no’ to credit card offers and I found my points base expanding! 

I will say that during the heyday of all our travelling, we definitely got $959 worth of benefits from travelling. Our vacations were both more frequent, and a little more enjoyable! We lived it up and I never paid one cent of interest from going into debt, meaning I felt like I was playing the game…and winning! 

What I had and why 

Currently I have 5 credit cards in my wallet, and here’s the rationale for me getting and keeping them (until now). PS – I am including a referral link for us both to get a sweet bonus if you feel so inclined to get a new credit card for your wallet 🙂

Delta Platinum Skymiles – $250 annual fee. I’ve had this card for probably 7 years now, and benefitted primarily from the companion ticket it offered. Mrs. Money and I were travelling a lot with Delta (living in a Delta hub), and getting a BOGO ticket easily made sense for us. The free checked bags and priority (Zone 1) boarding definitely helped out too. Also while I was heavily travelling, the MQM (status miles) boost from spending helped me climb that status ladder a little faster. 

Marriott Bonvoy – $95 annual fee. I’ve found it’s best to stick to one hotel chain if possible and I’ve been a Marriott loyalist for a number of years. There’s always one in whatever town or city I was staying in for work and I could ball out with my points in nice far away locations for free. The $95 in my mind is easily offset by the free night I get annually, and the 15 elite night credits (always about status) have helped me stay Platinum for a few years now. 

Chase Sapphire Reserve – $450 annual fee (soon to be $550). I got this monster credit card when it came out and they were offering a 100,000 point signup bonus (which sent us to London first class…thanks Chase!) and have primarily kept it for the lounge access since then. The rewards currency is pretty flexible and I plan to redeem one day in the future for hopefully another first class trip. The lounge access has been super nice both domestically and internationally. It’s not EVERY lounge but I feel like more often than not I’m able to find once at the airport I’m at and it’s great if I have a few minutes to get a snack or relax a bit! Of course during COVID it’s been no travel for us, but Chase has done good with offering other perks here and there – I mostly value the DoorDash DashPass membership (we do a lot of takeout) and the $60 annual credit they offer. I will say the $450 (which I just renewed at but now it’s $550) is a lot but they do give you a $300 credit for travel, but during COVID you also earn that from groceries and gas purchases (which we have plenty of), so that $450 feels more like $150. 

Bank of America Premium Rewards – $95 annual fee. This card upon first glance isn’t that great (2% points on travel/restaurants and 1.5% on everything else) but with the BOA Preferred Rewards program, you can get a 25%, 50% or 75% multiplier on those rewards, potentially earning up to 3.5% of travel/restaurants and 2.6% on everything else. That’s probably the best return anywhere. Plus you get a $100 travel credit each year for use on flights and such, so that’s not bad!

Southwest Rapid Rewards – $59 annual fee. Southwest was offering an incredible perk of earning a companion pass after just spending $3,000 on a new Southwest credit card in 2019 so I jumped all over that. The companion pass unlike Delta’s is good for the whole year, so anytime I flew, Mrs. Money could fly for free – anywhere Southwest flew. Right?!? We ended up taking 3 trips so Mrs. Money flew for free 3 times with me – Portland Maine, Florida and the Cayman Islands! This offer has come and gone but I held onto the card for another year. 

So – as you hopefully can see – I felt like each of my cards were justified and we got a good return on them! 

Why it’s a problem now

COVID really put a damper on our travel plans in 2020 (we had a lot of them) and is really going to hinder our 2021 travel plans as well, as I’m imagining it’ll be fall of 2021 before we feel safe doing much travelling. So, $959 is a lot to be spending for something we don’t really do as much now. I justified those fees in my head for 2020 (most renewals for me are early in the year) thinking COVID wouldn’t last that long and we’d be back after a few months. However, it’s clear that it’s going to be a few more months even in 2021, and I just can’t justify spending that much money on something I’m not using. My money would be better and more enjoyably spent elsewhere! 

My course of action moving forward 

After a lot of soul searching, spreadsheets, pros and cons and coming to terms with the new reality, I’ve made my plan of action. Now, credit cards can be tricky because you don’t want to just close them out completely – as I’ve got a good credit score that I’d like to keep. Closing a credit card can hurt your credit in two ways – one by decreasing the amount of credit you have available to you (making you look less credit worthy) and by erasing your (hopefully) good and on-time payment history. 

So, my plan is as follows: I’m going to get rid of my Delta Platinum and Southwest cards. I’m just not flying as much as I was once was, it’ll be late 2021 before I travel for work or pleasure, and who knows how much work travel will be coming back anyways. That’s $250 + $59 I’ll be putting back in my pocket. 

To make this happen – I plan to downgrade my Delta card to the no-annual fee option, instead of closing it. For my Southwest card, I plan to call Chase and ask to close the card but move my credit to another Chase card (Marriott or Sapphire Reserve). I’ve had friends do that in the past, and this way I’ll not lose my available credit. Hopefully I pull both off, be saving $309/year in annual fees, and still have my credit intact!

Summary

Too much of a good thing can become a bad thing, and I this is where I’ve landed with my reward credit cards. 2020 has forever changed us, and I can’t keep living in the past! I’ll be getting rid of my less valuable cards while still focusing on my more valuable cards! Hopefully travel will come back in 2021 or 2022 and I’ll be ready!