Hey, all, The annual fee just posted to my Chase United Mileage Plus Explorer MasterCard (not VISA, see below) this week and it’s time to decide what to do about it. I figured I’d post my thoughts here so the “wisdom of the cloud” can affirm where I’m right, correct me where I’m wrong, and offer insights that hadn’t occurred to me yet. Many decision points depend on knowing what other cards I hold, and I’ll make that clear when it matters. This card is a conversion from an old Continental card. I don’t know if they issue the United MP Explorer as a MasterCard, normally. (One Chase rep insisted that a MasterCard version didn’t exist. “Buddy,” I said, “I’m holding it in my hand while I’m talking to you.”) So far as I can tell, the only benefit I get from this being a MasterCard is that the annual fee is $10 less – it’s $85. Any other benefit based solely on its being a MasterCard is negated by having other MasterCards in my “stable.” Oh, and before we even start, all of this assumes that I’m not given a reasonably valuable retention offer when I call. If they lower the cost, or sweeten the pot, then all bets are off. Should I Cancel? This one is tricky … In addition to saving the annual fee, cancelling any card “resets the clock” with regard to applying for it again to earn another signup bonus. Furthermore, it’s one fewer card with that issuer which may help when it comes time to apply for any other card issued by the same bank. Some folks say you should only cancel as a bargaining chip while applying for another card. Either way, obviously, I’ll want to move the credit line to another Chase card. Analysis: I don’ t think “resetting the clock” is a consideration because I don’t think the MasterCard version of this card is available anymore and the VISA version is considered a different product for purposes of getting a signup bonus. (I can’t cite a source, but I recall that this was confirmed right after the Continental card converted.) Should I Convert? I know I can “downgrade” this card to a no-annual-fee United card that earns .5x (1 UA mile per $2 spent) and has no additional benefits. I’ve also read that people have been successful converting the card to a Freedom card, even if they already have a Freedom card. Since the $2,500 quarterly bonused spending cap is per card, that would let me double-up on those 5x opportunities, but the wife already has a Freedom card and I really doubt we’d be able to “triple up” our spending in those categories. Analysis: I place no dollar value on a conversion. Do you? Should I Keep It? Since we’re talking about money, the better question is, “What value do I get from keeping it?” Let’s look at the benefits: Spending/Miles The card earns 2x UA miles on all UA purchases, 1x on all other purchases, and gives a 10,000-point bonus if you spend $25,000 per year. Analysis: Buckle up – it’s math time. If you hold an AMEX Gold card (which I do) you’d probably rather put your UA spend there for 3x MR than on this card for 2x UA. Furthermore, if you’re spending a fortune on UA tickets, then you should probably have the United Club VISA instead of the Explorer anyway. Even if I didn’t have an AMEX Gold card, I’d rather have 2.14x UA points with a Sapphire Preferred card than 2 UA points with the Explorer. Failing even that, there’s always the Barclay Arrival MasterCard. Don’t get me wrong, 2x UA with the Explorer card is usually worth more than the 2.22 cents in travel reimbursement from the Arrival card, but if you put all of your travel expenses on co-branded cards, or the Sapphire Preferred, you’ll have nothing to redeem those Arrival points against, will you? (I plan to address the Sapphire Preferred vs. Barclay Arrival in a later post when I get the time.) Bottom line, there are almost always better places to put your UA spend, so I’m going to eliminate that from the decision-making process. If you look only at “un-bonused” spending, the best value you can get from this card comes when you spend exactly $25,000 on it. Doing so takes your yield from 1x to 1.4x, but every additional dollar spent on the card begins to lower that yield again. (For very high spenders, the 1.5x from the United Club VISA becomes a better value, but that’s a story for another post.) We all know that you can convert Chase Ultimate Rewards points to UA miles at 1:1 if you have a Chase Sapphire Preferred, Ink Bold, or Ink Plus card (and if you don’t have at least one of those cards, you’re probably reading the wrong forum). My Chase Freedom card gives me 1.1x UR points all day long (with a linked checking account), not counting any bonuses from quarterly rotating 5x categories. So, at its widest, the earning gap between the UA Explorer Card and the Freedom card is only .3x (three-tenths of a point per dollar). Any Freedom spending in 5x categories will narrow that margin farther. Then consider that a UR point is worth more than a UA mile because of its flexibility. Is it worth 30% more? For me, probably not, since I’m probably going to redeem them on United anyway, but it’s worth something. In real terms, spending $25,000 on your Freedom card will earn you 27,500 UR points. Spending the same amount on the Explorer card will earn you 35,000 UA miles and cost you $85, minus whatever value you assign to the other benefits of the card. If, for the sake of argument, you assign them no value, then you’re essentially buying 7,500 UA miles for $85 ($95 for the VISA version). That works out to 1.13 cents per UA mile (or 1.26 cents with the VISA). I think most of us can generate UR points cheaper than that. Priority Boarding This card gives “priority boarding.” Analysis: See here: http://screen.yahoo.com/airport-090000094.html Enough said. Primary Car Rental Insurance This card gives primary car rental insurance, so it “kicks in” before your personal auto insurance does. Analysis: Primary is better than secondary, sure, but there are limits to what is covered and what isn’t. Personally, I don’t use it. I always get the AMEX “premium” car rental insurance for $25 per rental. United Club Lounge Passes This card comes with 2 United Club passes per year. They’re single-person, single-entry passes – no guests, etc. Analysis: You can buy these for $50 at the door, if you like, but they’re only worth that if you’re going to use them. With lounges getting overcrowded and cheapening their liquor, I may be better off just hanging out at a bar in the main terminal. Since these things are selling for about $15 on eBay, that's clearly the most they're worth. Free Bags You get one free checked bag on domestic United flights, for the cardholder and up to one other person on the same reservation, if you bought the ticket with this card. Analysis: As I said above, I’d generally rather get 3x MR buying my airfare with an AMEX Gold than 2x UA buying it with this card. I also don’t check bags, so the benefit here would be limited to my wife’s checked bag only. This one is the deal-maker. Even if it only kicks in once, a single round-trip with a free checked bag that would otherwise have cost $50 (each way) makes keeping the card a no-brainer. Well, that’s it. I’m sure the conclusion is perfectly obvious to some of you. I’m equally sure that there will be people on both sides of the matter. I’m seriously on the fence with this one. What do you think?