Why I cancelled the American Express Starwood card

I’ve had the Starwood Card for five years. I’ve paid the annual fee each year. I even kept the card when the annual fee went from $45 to $65 due to promotions like Small Business Saturday where with all of our cards we got $125 in goodies for free each year. There are also promotions with Twitter and Facebook where you can get $10 off $10 from a small business or through Foursquare or $20 off $200 from Best Buy. So $125-$65 = $60 profit right + all these promotions? No brainer to keep it?

I’ve decided however to cancel it because $65 for an annual fee is money that I could be using elsewhere.

Lucky at One Mile at a Time writes about how he spends $1000 in annual fees for his credit cards and all the benefits he gains from those cards. I was in the same boat several years ago paying hundreds of dollars in annual fees for benefits. I had a Marriott card, several American Express cards, and other cards for the benefits. I don’t begrudge him at all.

I’m slowly heading the opposite direction. I just downgraded my American Express Hilton Surpass card to the free version of the card so that I can still participate in Small Business Saturday. I hit $40,000 in annual spend on the Surpass back in 2009 and it gave me Hilton Diamond status for several years which was very useful on our trip to the Maldives. This was in the glory days of dollar coins and it was easy to hit that annual spend.

I’ve had the Platinum Delta American Express card since 2001. Living in a Delta hub, I have been justifying that annual fee for the “free” companion ticket voucher and the ability to earn 20,000 MQMs on Delta each year for a $50,000 spend. I just hit the $50,000 spend a week ago and was able to keep my Gold status with Delta. But I’m frankly getting a little tired of $5000+ credit card bills in my mailbox each month. I put all of our day to day spending on there and pay it off in full each month and never carry a balance and am using Amazon Payments as much as possible as well. But I still feel like we’re overspending in pursuit of hitting a threshold to get some MQMs and not gaining any traction. I’m seriously contemplating ditching the American Express card as well to save on that annual fee and go to simply cash based.

I’m not ready to give up credit card churning overall. Last year I was able to pick up 80,000 Priority Club points for 1 transaction with no first year annual fee. The offers coming out are still pretty tempting. I was even able to refinance my house even with all the heavy churning.

But as I contemplated in the past, I don’t feel like putting all of my spending on my credit card is a good long term financial plan and that’s why I decided to cancel the Starwood American Express card. So take notice Platinum Delta American Express card – I’m putting you on notice with your $150 annual fee. I’m going to be carefully watching you and you may be getting the boot out of my wallet very soon, even if it means getting lower status with Delta.

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Comments

  1. For what it’s worth I would be careful not to confuse the frustration that your expenses are at least $5k a month – with the fact that your credit card made you do it. It may be appropriate to cut back on expenses and save more…and it may be that $50K in annual spending IS stretching you to make marginally inappropriate spending choices. At the end of the day however (credit) cards – fully paid off in full so as to not accrue interest are a superior choice to cash.

    The right card product will provide you with effective rebates (whether in the form of mileage or cash back) of broadly 1% of spending. I can’t remember the last time my bank gave me a rebate for spending cash.

    It may be true that you are leveraging a product that is no longer appropriate for your spending patterns and perhaps your goals. Fire the card product – and find something more appropriate – maybe a cash back card. I’d suggest not throwing out the baby with the bathwater.

  2. Good to see some rational planning advice on a blog. I think we too easily get caught up in the CC hysteria and many people don’t always make the best financial decisions at the time (have done that myself) with all this CC chasing. Times have changed and are not what they used to be. We all need to be more conscious of what is working and what isn’t!

  3. I personally have made money off of my Amex Starwood card, but it definitely requires a lot of effort with the syncing promos and other Amex only promotions.

  4. I’d be curious to see people’s math of money saved vs hours spent on accumulating miles. And no, getting a free breakfast at Hilton doesn’t mean you saved $35. Sure signing up for 50k points is worth it, but once you start filling out a survey for $2 worth of miles I think you’ve gone overboard

  5. I’m keeping mine for now because of small biz sat and other promos, but there are some other cards with high fees that are definitely on the chopping block (hint, one is blue and made out of metal). It’s nice to see someone telling it how it is for once instead of trying to get us to sign up for more stuff we don’t really need.

  6. Good points. I think if you churn cards you have to cut them loose a some point to move onto new ones later.

  7. @Mike – totally agree. Starwood is an innocent by-standard in this! I wish there were some banks nearby that offered debit card rewards for miles.

  8. @dealwelike – me too. But it became a bit too much when I was going out with 17 cards! Time to pare it back a little for me though I still do enjoy the hunt for deals.

  9. @Jason: Re: Debit Card Rewards. You can unfortunately thank Dodd-Frank legislation from about a year back for mostly eliminating that possibility. Until that time Banks received ~2% merchant fees for processing a debit card payment. Now they are limited to ~24cents a transaction – which they have to cover all costs with. As a result – rewards have mostly gone out the window on Debit.

    On the other hand the credit (card) side banks still make ~2% – so the reward game continues. One approach to take advantage of this is to set up you credit card account to auto-pay out of your checking account the full amount due on the payment due date. This is what I do – so I never have a chance to accrue interest or late payments. I think about it as ‘delayed debit’ with points. The challenge is not to get caught up buying too much each month….and to make sure your checking account has the cash to cover.

  10. Very thoughtful blogpost. Too easy to get caught up in the credit card rewards push, especially if you visit Boarding Area every day. I keep two Chase fee cards (Sapphire Preferred and Ink Bold) and the Barclay’s US Air Card (I fly that airline a lot, and there is the annual 10K bonus, $99 companion ticket, and 5K award discount). I let the others go, the small math required to see it if is worth it distracts from more profitable uses of my time. Good holidays to you and your family!

  11. @Cogswell – the comment about the hotel breakfast savings is spot on! If I didn’t have a free Hilton breakfast, my alternative is to probably spend ~$5 on a bagel and coffee. Some folks forget that.

    I’m scaling back on some of our cards, too. The benefits carried with some of them just aren’t worth it in many cases. Or, they were worth it but maybe I’m not going anywhere the next couple years where the SPG status (for example) is going to do my any good. I’ve changed project teams at work and that has meant changes to what hotels we stay at and airlines we fly. Things like that.

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