Credit card fees - apply, get bonus, then cancel?

[Chuckanut]

I recieved a CC offer for 50,000 miles used when traveling. But, it comes with a fee of $90 a year, which is waived for the first year.

Normally, I avoid cards with fees as I have never found them a benefit. But, this offer seems to be worth $500 in travel to me. I am thinking of getting the card, using the miles, and then canceling before my one year anniversary so as to avoid the $90 fee. It seems to easy. Has any body tried this and does it work

 

[mystang52]

Yes it does work. I have gotten more than one of these offers, from different cards. I kept one card (the annual fee paid for itself with other perks). The others I cancelled within the first year, no hassle and yes I got to keep the perks I had earned.

 

[jetpack]

I've done that, I'm sitting on a pile of points right now I need to use. Do keep track of when you need to cancel them. Also, note that opening more cards can negatively affect your credit score... if you need that sort of thing.

 

[Sesq]

Keep good records, set calendar reminders to cancel at the 11th month (or threaten to cancel, they may waive the fee). Over the last two years I average a new card per month, primarily for sign on bonuses.

You can also downgrade to no-fee cards, some of which are handy to have.

 

[braumeister]

It's not uncommon at all.

I took a Marriott Visa a couple of years ago to get a huge signing bonus. The card has an annual fee of $85, and I decided to keep it after the first free year. They guarantee me a free night at a Marriott hotel every year and that's worth far more than the $85 fee. Plus I still get all the points.

Some cards are better than others, but if you bother to read all the details (as I'm sure you would), there don't seem to be any downsides.

 

[GalaxyBoy]

I got a Hyatt reward card and took the two free nights at a $500/night resort in Kauai. I intended to cancel after a year but they give me another voucher for a free night each year. Unfortunately, they wised up and limit it to lower-tier properties but the free night is still worth more than the annual fee, so I'm keeping the card.

One thing to look out for is applying for multiple cards at the same time. I tried that with the Hyatt card and the United card, but since both are Chase they caught it and denied one. I also have a Chase Amazon card so I'm sure that didn't help.

 

[calmloki]

We've scooped up several thousands of dollars spending money we would normally spend to meet spending requirements to gain sign up bonus dollars from card companies. In fact, this Sunday we will drive over to Williams Az and take advantage of this little junket: Grand Canyon Discovery Package | Grand Canyon Railway & Hotel, Arizona The cost, after room taxes and such, will be $20 more than the sign up reward from a Barclays Arrival card. Granted, we will leave a day earlier to go through Congress and Prescott, and the whole trip will cost more when you figure in gas and such, but this seemed like a nice self chosen near-freebie. We'll be cancelling in a few months.

 

[Chuckanut]

I am concerned that the card offers miles not dollars. My Costco Amex rewards with dollars which keep their value. But this card offers miles. Today 100 miles equals one dollar. But there is nothing to keep them from deciding next month that it takes 120 miles to equal a dollar.

Has anybody found their CC miles or points being devalued?

 

[calmloki]

Most recently, Penfed decided it would take 30,000 points for a $25 credit rather than 25,000. I also like to convert to dollars.

 

[kaneohe]

Most recently, Penfed decided it would take 30,000 points for a $25 credit rather than 25,000. I also like to convert to dollars.

is there an extra zero here?

 

[calmloki]

is there an extra zero here?

By Gar - so there are:

PenFed Prepaid Visa® Reward Card $50
Item #: ECPFV50
5,900 points

The above is what I pull from their rewards Visa site tonight.

 

[Chuckanut]

One of my airlines is raising it's milage for a refundable coach seat by 2500 miles. Refundable first class is being raised by 10,000 miles. Each is for one way.

 

[Ready]

The sign up bonuses sound great, but most of these cards have only mediocre rewards once you get the sign up bonus. There's no harm in keeping them for a year and then canceling. It's just a bit of extra work, but manageable.

One free night in a Marriott or Hyatt hotel sounds nice, but I'm guessing that most people stay for more than one night, so they are just getting you to spend money on their property by giving you a free night in exchange for a fairly high annual fee. It's still not a bad deal, but I see it more as a marketing tool to get people onto their properties and hope they spend a bunch of money once they get there.

The best overall card is still the Fidelity American Express card. It gives back 2% cash on all purchases, no minimums or caps, and no annual fee. I would still make this your mainstay card, and then use the other ones for the bonuses and perks that come and go.

 

[obgyn65]

I have never done that. Doesn't feel right.

I recieved a CC offer for 50,000 miles used when traveling. But, it comes with a fee of $90 a year, which is waived for the first year.

Normally, I avoid cards with fees as I have never found them a benefit. But, this offer seems to be worth $500 in travel to me. I am thinking of getting the card, using the miles, and then canceling before my one year anniversary so as to avoid the $90 fee. It seems to easy. Has any body tried this and does it work

 

[Mulligan]

I have never done that. Doesn't feel right.

You are too kind a person, Obg. CC's will try to get you if they could as they are always changing the rules of the game, too. Right now I currently have two 0% access checks written off the same CC, one expires late this year, the other one late 2015. Guess which one they are applying 90% of the payment toward? Yep, it would be the 2015 one even though I used it after the one due this year. They want to trap me into owing interest on the first when the 0% rate expires. But too bad for them as I will just write the check and pay them both in full at that point and they will not get a penny from me despite their tactics. FWIW I don't chase reward card offers but only because I'm too lazy to want to deal with tracking all the cards.

 

[Ready]

I don't see any issues with this either. The promotion is intended to get you to try out their card. They are hoping you will like their service and keep the card after the promotional period. Clearly they understand that by charging you a fee after the first year they risk losing you. If they really want to keep you they will find a way to make the second year appealing. If not, it's only fair as consumers to reevaluate the marketplace and see what else is out there.

 

[Chuckanut]

I have never done that. Doesn't feel right.

The reality is that without the incentive I would never apply for this card. I would rather have the real $$'s that my other reward card gives me. But, they obviously want a shot at my business and are willing to put up some cash to get it. So, while the odds are I will cancel it before the end of the year, I will give them the opportunity to show me the card is more valuable to me than I think it will be. In return for that opportunity, they give me some $$'s. They certainly stand a much better chance of drawing me in with a financial reward, than with an advertisement featuring some hot young woman, wearing her bikini on a tropical island beach. I can't see a problem, moral or otherwise, with their choosing how to spend their promotional money, or me giving them the shot they want at my business.

 

[Lsbcal]

I'm conflicted about this one just like a lot of things in life.

Got a Chase Sapphire card a few years ago with a $400 bonus if you spend $3k in 3 months (still a pretty good bonus available). Collected the bonus. Kept the card as I like their service a lot. Maybe just a little too lazy to go shopping for another card.

You can actually talk to an intelligent American on the other end when issues come up. Clerks like the heavy card (has metal inside it) and new ones are chip+signature ready for European travel. No NTF charges, very good exchange rate when I used it.

 

[kgtest]

Free money! If you know when to cancel to avoid the fee's the benefits can be worth it...especially if you fly or stay in hotels a lot.

My ole man and I keep abreast on all of the latest cards and we earn a few free flights a year for both us and our spouses.

And yes, the consumer is at the mercy of the airlines rewards programs, redemption rates and blackout dates. Often there are unfortunate layovers as well.

 

[tulak]

I'm conflicted about this one just like a lot of things in life.

Got a Chase Sapphire card a few years ago with a $400 bonus if you spend $3k in 3 months (still a pretty good bonus available). Collected the bonus. Kept the card as I like their service a lot. Maybe just a little too lazy to go shopping for another card.

You can actually talk to an intelligent American on the other end when issues come up. Clerks like the heavy card (has metal inside it) and new ones are chip+signature ready for European travel. No NTF charges, very good exchange rate when I used it.

I'm in the same boat, except my year isn't over yet. I'm tempted to keep the card and pay the annual fee. Maybe I'll try calling them and see if I can get it waived for another year.

 

[audreyh1]

If it's the United card, it also gives free checked first bag for you and companion if tickets bought on the card. This is much cheaper than paying for any of their "baggage fee subscription plans".

More than one trip with 2 people checked baggage each way, and you are ahead. Actually - you are ahead with one annual trip by a few bucks.

And you get premium boarding - just after first class. That's nice too.

Just some things to consider.

 

[Chuckanut]

This is not directly connected to the above discussion, but it does reference credit card rewards and a potential problem to be aware of.

I used a Discover Card last month to make a number of online purchases. Discover was offering a 5% cashback bonus for online purchases. The purchases I made from well known online companies like Amazon got the bonus. But, my biggest purchase by far was from a company whose products are usually sold at specialty stores and big box stores. Discover completely missed that and did not give me the bonus (over $50). One call to Discover and they quickly fixed the problem. Just a word to the wise.