When you are in this game for a while, you’ll realize there comes a time when a card has served its purpose and you need to evaluate whether it’s time to remove it from your portfolio.

I figure this is a worthwhile exercise to discuss as I consider my own scenario, as it might shed some light into how I got to the point of having too many credit cards. Generally speaking, there are two types of credit cards: those that you signed up for because of the great bonus at the time and those that offer good benefits on an on-going basis. For those credit cards that were originally taken purely for the sign-up bonus, there shouldn’t be any ill feelings on getting rid of those cards. You might not want to cancel them right away–perhaps you’re trying to establish a good track record with the issuing bank and so you renew for one year–but then it should still be pretty transactional after that point.

Perhaps the card you signed up for had both a great bonus and offers great benefits and so it has been in your wallet for some time. These cards are the harder ones to figure out, and it’s especially true if the card issuer has decided to refresh the features of the card, making it look different than before. How do you go about determining when a card’s value doesn’t exceed its annual fee?

My Scenario

As it currently stands, I’m at two dozen credit cards that are currently open where I am the primary cardholder (not counting accounts where I am an authorized user). Total annual fees on all these cards are pretty painful, ranging from plenty of cards that have no annual fee attached up to the hefty $695 annual fee for the American Express Business Platinum card. Collectively, I spend thousands of dollars on annual fees alone and I’d like to get these expenses under control.

I’m going to only discuss three cards that I have–the American Express Business Gold card ($375 annual fee), the Hilton Aspire card ($550 annual fee), and the Ritz Carlton card ($450 annual fee)–as I think the discussion should give enough of a feel on how to handle this.

Case Study: American Express Business Gold

Here is a list of facts of the card:

• Annual fee: $375
• Earn 4x Membership Rewards (Amex MR) points on the top two categories every month: advertising, electronic goods retailers, restaurants, gas stations, transit, wireless
• Up to $20 in monthly credits at FedEx, GrubHub, and office supply stores
• Walmart+ monthly subscription
• Access to Amex offers, referral bonuses, and ability to transfer Amex MR points to travel partners (these aren’t typically talked about as main features of the card, but still relevant to point out)

First, let’s do some math to find out what I value the card to be.

• Of the listed bonus categories, I spend the most at restaurants. In fact, I spend about $8,500 annually in restaurants on this card (an amount that continues to climb as my children get bigger). As a 4x category, that’s 34,000 Amex MR points. I’ve seen others value one Amex MR point between 1.5 and 2.0 cents each. For the sake of conservatism, I’ll call it 2.0 cents each MR point here, and so this component by itself is worth $680.
  • However, this fails to recognize that I actually get value out of other cards that offer bonus multipliers on dining. In fact, I have the Citi Custom Cash, which offers a 5x multiplier on dining expenses but is capped at $500/month. Simplistically assuming I cap the benefit each month, if I move $8,500 of annual dining expenses to this card, I would earn 32,500 Citi ThankYou Points. Again, for ease of calculation, let’s assume 1 Amex MR = 1 Citi ThankYou Point, so let’s call it worth $650.
  • That means putting spend on this Amex Business Gold card only earns me an incremental $30 in value for its bonus categories.
• Annually speaking, I could get $240 in credit at places like Staples. But it’s not a store I go to frequently–in fact I need to go out of my way to remember to use it and to get there. Plus, I don’t ever spend exactly $20 when I’m there. I get close to $20, but it’s more accurate to say I have to spend about $5 out of pocket. Mathematically, it’s more equivalent to say I have a coupon to buy $25 of goods for only $5 each month, if I so desire to go there. It’s nice to stock up on school supplies every once in a while, but I’m running out of things to buy there on the cheaper end (understanding fully that I could purchase a $20 Staples gift card but there is a non-zero risk of American Express determining that it’s not allowed an claw it back at some future date). Plus I have no use for FedEx or GrubHub credits, so I am stuck with Staples. If I were offered an opportunity to buy this feature up front, what would I spend? Honestly, it would be less than $100, but in the interest of simplicity, let’s call it a $100 value.
• I have no use for a Walmart+ subscription and thus value this at perhaps $10 annually? There might be an item I need to purchase from Walmart that would then require paying a shipping fee, so I’ll conservatively call this a $10 value.
• Some American Express accounts have lost the ability to earn referral bonuses, and this applies to mine, so there is no incremental value from referrals.

I find the value of the card to be $140–$30 from the incremental bonus categories, $100 from the Staples credit, and $10 for the occasional shipping charge from Walmart. That is far below the $375 annual fee.

But what about a retention bonus? Well, doing the math above then arms me with the knowledge of the minimum retention bonus to accept if keeping the card. If I value the card at $140 and the expectation is to spend $375, I would need a minimum of $235 in points to make up the difference. Using the same 2.0 cents per Amex MR valuation above, we get to a minimum retention bonus of 11,750 Amex MR. Since this is just a break-even calculation, I’d shoot for a greater margin (say, 15,000 Amex MR) to make it worth my time.

Naturally, I called in and didn’t receive a retention bonus, which made it easy to cancel this card.

Case Study: American Express Hilton Aspire

Again, here is a list of facts about the card:

• Annual fee: $550
• Automatic Hilton Diamond status for just having the account open
• A free night at any Hilton hotel that has standard award nights available
• $400 in statement credits at eligible Hilton resorts (offered in two $200 semi-annual credits)
• $200 in airline flight credits (offered in $50 quarterly credits)
• $199 credit for Clear Plus
• Access to Amex offers, referral bonuses, and ability to transfer Amex MR points to travel partners (these aren’t typically talked about as main features of the card, but still relevant to point out)

So let’s again go through all these benefits.

• I feel disenfranchised as a Hilton elite member. Even as a Diamond member, I’ve received a downgrade at a Hilton hotel and offered no real consolation. Unless you’re going to ultra-high-end hotels, I’ve never found a reason to be a Diamond member over a Gold member: you still get all the same promised breakfast/f&b credits, and I can’t say I’ve received an upgrade as a Diamond that I wouldn’t have received as a Gold member. I have credit cards that offer Hilton Gold status as a baseline, so I’m going to be bold and say I value Hilton Diamond status as $0 incrementally over Gold.
• Hilton is my third choice for hotel chain, behind Hyatt and Marriott. Why? Because Hyatt Globalist status is the best in the industry and I have lifetime Platinum status with Marriott (thus easy to maintain). I also don’t travel for a living (despite what some people might think) and it’s hard to use free night certificates with each hotel chain. All of this to say that I find it tough to use Hilton free night certificates as a result, especially with this desire to maximize the value of the certificate. Sure, there are times I can get real value of out it at a place like the Grand Wailea, but more often I end up using it at a less aspirational place like the Hilton in Universal City. I’m going to say it’s worth $250 to me based on my travel patterns.
• I don’t value the Hilton statement credit at face value. Why? Because believe it or not, I would prefer to dine off-property if given the chance. I find on-property venues (especially at resorts) to be a bit overpriced and perhaps not reflective of local cuisine. There are exceptions where you will be trapped on property–the Conrad Maldives comes to mind–but it’s not the norm. Yes, there are ways to use the statement credit towards room rates, but again that generally requires going to an international resort and that doesn’t fit my typical travel patterns. Lastly, the semi-annual nature of the benefit means I might not be able to use it every time. I simply don’t stay enough at select Hilton resorts. I value this benefit at only $100, but it could certainly be worth more for others who stay at Hiltons more often.
• The $200 airline credit is actually easy to use. There aren’t as many restrictions on it as there are with other airline credits from American Express, and I’ve just used it to directly charge up my United TravelBank to use the credits on a future flight. Even if that avenue goes away, I don’t think it’s hard to find a use for the credit. I’ll call it $200 value, but that’s a little generous. Note that if someone sold me a subscription of 4 $50 flight credits, I wouldn’t pay $200 for it up front (time-value of money).
• I have several other cards that offer a Clear Plus credit, so I would call it worth $0 to me.
• Though I had referrals available to me on my Hilton Aspire card, it wasn’t used in the past year and I don’t anticipate that changing. I’ll call this $0 value as well.

I find the value of the Hilton Aspire card to be exactly the same as its annual fee–right at $550. Let me ask you: does it make sense to spend $550 to get $550 in value back? I’d argue no, because why give up cash when you’re not getting much incremental benefit? At this price, I’m indifferent.

Of course, that could mean that literally any retention bonus would help push me over the top. However, in my experience, I’ve found American Express offers no retention bonus on any card that also offers an annual certificate for just having the card. Naturally, no retention bonus was offered when I requested to cancel the card, so I chose to save the money.

I find it rather notable that other blogs like to say that this Hilton Aspire card is a “no brainer” and yet I would argue the opposite. You need to be a Hilton fan, ready to stay at a specific list of Hilton resorts at least once a year, in order to maximize this card. If not, it might make sense to look elsewhere at other cards.

Case Study: The Ritz Carlton Card

For our final case study, let’s review the Chase Ritz Carlton Card, a card that you can’t directly get but can upgrade to it from a different Chase Marriott credit card:

• Annual fee: $450
• Automatic Marriott Gold status for having the account open
• 15 elite night credits for having the account open
• Marriott Platinum status for spending $75,000 on the card in a year
• A free night at Marriott hotels costing 85,000 points or fewer
• Upgrade certificates to Ritz Carlton Club level (3 annually)
• $300 airline credit, intended to be used on checked bags, seat fees, inflight Wi-Fi, and lounge access
• Priority Pass and access to Chase Sapphire Lounges

So let’s have one more go at this:

• I have Lifetime Platinum status with Marriott, and have no interest in going out of my way to accrue elite night credits for either Titanium status or for 50-night annual choice benefits. I would then value the Marriott Gold status, the 15 elite night credits, and the ability to earn Platinum status with spend at $0.
• The Marriott 85k free night certificate is the most useful certificate offered by Marriott. I find decent ability to use these certificates without too much effort on my end, staying at hotels like the JW Marriott Parq Vancouver or the fun Courtyard Marriott Theme Park Entrance (still feels weird to use one of these at a Courtyard). I also find it convenient that you can also top off these certificates with up to 15,000 Marriott points to add to their flexibility. I find myself able to reliably get $300 in value from one of these certificates.
• I have never redeemed an upgrade certificate to the Ritz Carlton Club level. Perhaps one day, but until that happens, I’m going to consider it $0 value.
• The $300 airline credit is a little annoying to use as some of the benefits that come with elite status means this credit isn’t actually needed. I do sometimes use the benefits when flying non-preferred airlines. There’s also a way to cheese this benefit a bit and use it for things outside its intended purpose, but it requires a phone or online conversation with a Chase representative and that adds a bit of mystery to the benefit. I’ll consider this to be worth a $200 value.
• For the longest time, this card has my favorite version of Priority Pass: free access for you and guests, with free authorized users who could then also get their own Priority Pass card. The value of Priority Pass has deteriorated with the removal of restaurants, but once in a blue moon I’ll pass through an airport with a lounge that accepts Priority Pass. I’m more interested in checking out Chase Sapphire Lounges, so I think in the upcoming year I’ll find more use from the lounge benefit. I’ll call this a $50 value.

All said, I can reasonably get to a $550 value from the card. On a $450 annual fee, this makes the card a keeper in my book.

Your Valuations Will Be Different

The above gives a rough framework on how I’m approaching each credit card I have in an effort to pare down the list and save money on these annual fees. How I value each benefit is going to be undoubtedly different from how you evaluate each. That’s because you should be basing your valuations on what other cards you have (e.g., opportunity cost of an incremental $1 spend in bonus categories, overlapping benefits, etc.) and your own situation. Importantly, keep in mind that one person’s declaration of a card being a “no brainer” doesn’t mean you should feel forced to view it the same way.

Remember that when you cancel cards, you might want to consider hanging onto them to use them as a pickpocketing decoy.