Spend worth keeping the Chase Sapphire and Amex PRG.

Discussion in 'General Discussion | Miles/Points' started by thrashsoundly, Nov 10, 2011.  |  Print Topic

  1. thrashsoundly
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    thrashsoundly Silver Member

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    Like many of you I have the Chase Sapphire Preferred and the Amex PRG cards which I understand are in many cases two of the best everyday spend cards currently on the market. Besides the sign-up bonuses (terrific), the bonus point multipliers make them a great value, especially with the many transfer partners.

    However, I've been wondering the last few days, what kind of yearly spend on these cards makes the annual fee worth it to keep the cards around for many years? IIRC the annual fees are $95 for the Sapphire and $175 for the PRG.

    I'm new enough to miles and points that I still have to think hard about cpm whenever they're discussed, and I don't yet have a good feel on what cpm is considered great. I understand the value of the two cards really depends on the transfer partner you use, so let's assume best case scenario, which most seem to agree are currently UA/CO and Hyatt at least for UR points. I do also understand that MR point values are getting more complex now.

    I know that the more points I earn each year will drive up the value of keeping these cards, but I'm not a big spender (grad student), so I'm just trying to weigh my long-term options.

    How much do I need to spend on these cards to make the annual fees worth keeping the cards around?
     
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  2. FlyingBear
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    FlyingBear Silver Member

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    Start easy: how much do you spend on the two now?
     
  3. thrashsoundly
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    thrashsoundly Silver Member

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    Everyday spend would come out to a few hundred a month on gas, groceries, dining etc. Obviously the infrequent travel I'm doing right now would go on the cards as well as random other expenses. I could increase my spend if I got creative, but haven't got to that point.

    I can do the math based on my current or potential spend, but I guess I'm fuzzy on how valuable the points are or have the potential to be. For example I know if I spend 10K in a year with a 2x bonus, I could get 20K points for $95 which is just over 2 miles per cent, but have no idea if that is generally speaking a good value or not.
     
  4. FlyingBear
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    FlyingBear Silver Member

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    If I just use a number quoted elsewhere by another user and value each point at $0.02, then you just got $400 worth of points for $95. While not bad, I would argue that 2-3 cashback cards (AMEX Blue cash, Citi Dividend World MasterCard, etc.) could give you the same or better return. Throw $175 dollar card in there, and unless you are using any of the other benefits offered by those cards, you are not coming out ahead, you are paying more than 2% of your spend just for the privilege of using those cards.

    I would recommend doing an approximate budget and see how it looks on either/both of those cards as far as points go. These two cards are recommended by quite a few, but if you pay close attention, the people recommending them have a higher spend than $10k/year.
     
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  5. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Definitely hard to justify both cards or at the very least the $175/year card with $10k spend.

    Also... "How much do I need to spend" -- avoid the slippery slope of spending more money than you would if you didn't have the card just for the sake of earning 2 cents/dollar back.
     
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  6. thrashsoundly
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    thrashsoundly Silver Member

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    I'm certainly not planning on spending on these cards beyond my means as that will defeat the purpose of doing all of this.
    I've pretty much decided that my spending ability/desire likely isn't enough to keep the PRG, but I'm still interested in knowing what kind of minimum spend makes the fee worth it regardless of whether I can meet that now or not.

    In other words, I won't always be a grad student. Hoping that I'll all be done by this time next year btw.
     
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  7. FlyingBear
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    FlyingBear Silver Member

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    That will also depend highly on what you will be using the miles/points for. That alone can change the number twofold. And you will need to actually consider what you are comparing to. So, some things missing for a full analysis here.
     
  8. harvson3

    harvson3 Silver Member

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    Consider opportunity costs and your long-term costs on the credit score.

    If you drop the Sapphire Preferred and sign-up for the MileagePlus Explorer (which is/was rumored to have a 60K bonus for all forthcoming), you can skip the annual fee and get 60K for $0 + -2-4 points on your credit score and a lower average-account-age. Or the same costs for 100K on the two AA cards, which makes sense if you can pay bills ahead of time to meet minimum bonus spending requirements.

    Because airline prices vary over time and itineraries, getting a point estimate (in statistical terms; not a pun) of what they're worth is misguided. If you can redeem for first/business class international travel, it can be as high as 9 points; for other options it can fall to 0.5 points. In other words, what FlyingBear said.
     
  9. yaychemistry

    yaychemistry Silver Member

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    Like you, I'm a graduate student thus my annual spend isn't that high. I'm pretty aggressive in boosting my c.c. spend in overall spend-neutral ways (e.g. at restaurants I put the whole bill on my card and my friends pay me their share in cash - it helps to have supportive friends :) ). I also have two cards, the Chase Sapphire and the Mileage Plus Select. Between the two I get double points on gas, groceries, dining and travel. Plus I religiously use the shopping portals for either card and try to do all of my shopping for everything online (I regularly buy clothes and kitchen items at Kohls and they frequently have 10 points per $ at the UR portal). So with that I can feasibly earn close to 25k+ miles/points a year while only actually spending around $10k.

    Now as a cost per mile, I'm spending a little less than 1 cent to get each mile for the roughly $200 in annual fees (although I'm still in the first year of waived fees). At 1 cpm I'm roughly breaking even... sure I could get lucky and find saver space for a $400 domestic ticket. But, redeeming for domestic awards is kind of sad.

    I fly an average of 25k miles a year. Without the cards, I earn enough for a business class ticket to Asia every five years. With the cards, and the $1000 in annual fees over five years, I can take my girlfriend with me. Now, if I found a sale I could probably find an economy ticket to Asia for the same amount of cash, so the card-route basically gets me to the same place but in more comfort. However, with award routings you can get a free stopover in Europe, so I would rather take the award ticket. (As a graduation gift to ourselves we are flying to BKK with a stopover in OSL, but most of that was from sign-up bonuses).

    So to me, the cards are the difference between flying business by myself or with my girlfriend. However that's actually worth is subjective.

    All in all, I think that $10k spend a year if you can get your point earning up close to 25k points a year with spending categories and shopping portals then I would say that $200 combined in annual fees is borderline worth it. If my spending were to stay at this level I would almost certainly cancel one of the cards at the end of the year, but since I'm graduating soon (and I'll hopefully have a good job!! Anyone want to hire a PhD theoretical chemist? I can write mobile Apps, too!) I will probably keep both assuming my annual spend increases.

    p.s. good luck with your studies!
     
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  10. RestlessLocationSyndrome
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    RestlessLocationSyndrome Silver Member

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    This is what you should do:
    Break down your 10k in spend into the bonus categories from the cards.
    Come up with your valuation of miles/points based on how you use them.
    Multiply them together to find the value you are receiving.
    Subtract your actual cost of the annual fee.
    Subtract 1 cpm/cpp as your opportunity cost of not having the spend on a no fee cash back card.
    The result will tell you whether or not you keep them.

    As a general rule, if you don't use miles/points for maximum value (business class and up flights, free stop over & open jaw awards, high cost hotels & resorts), you probably aren't getting much more than 1 cpm/cpp and in that case, go with a 1% cash back card w/ no fees and just use cc sign up promos to get bonus miles.
     
  11. IkeEsq

    IkeEsq Gold Member

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    If you are spending $10K a year, you are FAR better off getting a couple/few cards with big bonuses each year than just earning spend points. Grab a couple of Citi AA 50K cards and a hotel card (Hilton 60K, Marriott 70K, etc.) or two and you'll earn a couple hundred thousands points/miles in a year just on bonuses with the same spend as gets you 20K UR/MR points. Call retention at the 10-month mark and get fee waived or other bonuses and cancel or keep as you see fit.
     
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  12. thrashsoundly
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    thrashsoundly Silver Member

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    Thanks for the additional insight everyone. I'm bursting at the seams with CC bonuses, and have gotten over 800K this year (CSP, PRG, BA ,AA x2, PC, CO) for me and my wife with the helpful guidance from many of you, so thank you! I'll be using all the points and miles on premium international travel, so I'll get good value out of them.

    My first "official" award trip will be in the spring to HKG, BKK, and SIN using my BA miles on CX. It'll be the first time going back to Asia since living there as a kid. I'm sure my parents never thought they'd instill such immense wanderlust in their child. I either have to thank or curse them for that. ;)

    The bonuses are fantastic, and as a small spender, this is the preferred route to me, but I couldn't help but wonder what kind of spends make keeping those two specific cards worthwhile rather than canceling or downgrading to no-fee cards. I understand everyone has a different idea of mile and point values which is why I'm asking a large audience to get a broad perspective. Hearing how others use the points and what they deem their value is extremely useful in my quest to learn more about this new terrific obsessionhobby.

    Oh and to add to the job petition from yaychemistry, does anyone want to hire a physicist/atmospheric scientist? :D
     
  13. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Better start learning iOS coding, too :)

    Just kidding!

    Sounds like your earnings from actual spend are a drop in the bucket of your overall mile/point earnings. Well done! I know I often get more than 2 cents per mile out of my UA miles, but that's roughly the value I mentally associate with them when I try to figure out if something's worth doing or not.
     
  14. Andyandy
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    Andyandy Gold Member

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    Personally, I agree with HMWT about slippery slopes. In your situation, my advice would be to keep your credit score high and get your points via occasional signup bonuses rather than spend. I know that I'm dropping a couple of cards before annual fees come due. On that note, you might want to consider upgrading that PRG to Plat, depending on when your membership year runs. I just got 50K for upgrading and it will only cost me around $125 for the prorated annual fee.
     
  15. hulagrrl210
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    hulagrrl210 Gold Member

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    2 words: amazon payments ;)
     
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  16. FlyingBear
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    FlyingBear Silver Member

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    Unless I misunderstood what you mean, that can be reduced to one word: fraud. Amazon got some good algorithms.
     
  17. hulagrrl210
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    hulagrrl210 Gold Member

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    I think you misunderstood. Fraud is a strong word.
     
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  18. daemon14

    daemon14 Gold Member

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    I'm also a student and I have the Chase Sapphire Preferred. I absolutely love it. I've been thinking of adding the PRG but with the recent devaluations of MR partners, I've decided against it. Instead, I'm getting a Chase Freedom to supplement my Chase UR account. With the quarterly bonuses, I could get 30K Chase points for $6K spent. Granted, that's the maximum, I could easily get 20K points from an average $1K spend each quarter, depending on the bonus. That way, I'm spending $95/year for a solid combination of cards that earn valuable Chase UR points from everyday spend.

    I'd keep signing up for bonuses. That seems to be the best bang for your buck when it comes to not having high spend amounts. Once you meet the spend requirements, move back to the Chase cards.

    That's my position. It also helps to have parents who put $200K spend on their business AMEX and Chase cards each year, and let me dip into their point vaults for my travel since I book all their international awards in F and J for no charge. But hey, it's better than them paying my tuition! :p
     
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  19. FlyingBear
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    FlyingBear Silver Member

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    Well, you are not explaining anything, so I only have to go by what I know and assume you are referring to the trick lots of people were recommending without understanding consequences and cycling money through their own accounts. Fraud is the correct word in that context and is why Amazon kicks people off.
     
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  20. hulagrrl210
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    hulagrrl210 Gold Member

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    Again, you assume the worst. I already got in trouble over on the other site for "saying too much" and trying to be helpful, but whatever, this information is already out there: Find a friend to play with and keep it under $1000 a month and you should be fine.

    How is it fraud if my husband sends me a little money every now and then (monthly) to say, help cover bills and then I pay him back when I get the chance?
     

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