Are your credit cards actually working for you—or just draining your wallet with sky-high annual fees? In this episode, Nick Ewen, Editor-in-Chief of The Points Guy, breaks down everything you need to know about navigating today’s increasingly complex credit card landscape.
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Show Transcript
Jeffrey Snyder, Broadcast Retirement Network
Well, we’re going to welcome back to the program again, Nick Ewan. He is the editor-in-chief, chief, excuse me, of The Points Guy. Nick, thanks for sticking with us and coming back again today.
Of course, excited for the conversation. So when we last, you know, for those that didn’t watch the show, and of course, this is up on a gazillion sites and platforms, but Nick talked about the importance of getting your travel in early for the holidays and booking, you know, it’s like buying your Halloween costume, Nick, but let’s talk about the credit card explosion of credit cards. I have, I have several, but Nick, they’ve actually become much more complicated instruments, financial instruments.
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah, that’s true. I mean, just in the last few years, we’ve seen not just an increase in the number of products that are out there, but we’ve also seen a lot of issuers increase their annual fees while adding a bunch of benefits that seem maybe on the surface to be great, but they actually require some effort to utilize. So it’s really important more than ever before that consumers really understand what cards they have, what they cost and how to make sure that they are leveraging the benefits.
Because in many cases, there may be a lower cost or a more effective solution for you, given your specific spending habits or the types of benefits that you actually get real tangible value out of.
Jeffrey Snyder, Broadcast Retirement Network
So do credit cards, did some of the offerings now still have fees, meaning you pay an annual fee, like American express is one, I think they have an annual fee, but they also have like an unlimited spend, but are you seeing more cards have these benefits, but also have that annual fee?
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah. I think the annual fee curve has really been increasing. Um, so just last year we saw American express on its flagship platinum card actually increase the annual fee to $895.
Uh, now it’s a lot of pop money to spend out of pocket, but in, in exchange, you get a ton of benefits. I am a proud platinum card holder myself. And I make sure every year that I get at least that amount of value out of that particular card.
And there are other cards that are in a similar ballpark as well. Even some cards that are associated with specific airlines or even hotel programs have credit cards that have annual fees of five or even $600. It’s more important than ever though, to make sure if you have one of these cards that is at the higher annual fee spectrum, that you really look at the real value that you’re getting out of its various perks.
These can include things like airport lounge access or statement credits for specific types of purchases. But it’s really important to crunch the numbers because sometimes you may just be carrying around a really fancy card and there might be a better fit for you that has a lower annual fee or even no annual fee. There’s some really great cards out there that are for a lot of flexibility that don’t carry any annual fee at all.
Jeffrey Snyder, Broadcast Retirement Network
You know, it’s funny you brought that up. When I was a much younger man, I had the Visa Black Card that was kind of all the rage in like the early 2000s and I bought it because it was all the rage. And I never really took advantage of it.
So I had to make the phone call to Visa to kind of try to convert to a card that didn’t have a fee. Is it, and from what I recall, it was actually difficult to kind of deconvert. Can, if you go into one of these annual fee cards because you see the benefits, but let’s say over time, you no longer need those benefits.
Can you can deconvert and get to a no fee card? Is that easy to do typically?
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah, it’s typically relatively easy. There are certain restrictions though, in the sense that you can’t change into a different card family, so to speak. So let’s take American Express, for example.
If you have the platinum card, you decide it’s not worth it for you. You can’t say, well, I want to switch to the no annual fee Delta credit card. That’s considered a different card family, but generally every card has at least a lower price companion.
So the best bet is when your annual fee does come due, you call the issuer and you say, look, I just can’t justify this cost anymore. I do want to keep the card open. I value the rewards that I’m getting.
What are my options to potentially downgrade it to a lower fee or a no fee option and see what they are able to do for you. In some cases, they actually may offer you a retention offer. We’ll just say, you know what?
We aren’t, we don’t really want you to downgrade. What if we gave you $200 off that annual fee for this coming year? Or what if we gave you a little incentive that for the next three months, if you spend a thousand dollars, we’ll give you an extra 20,000 points.
It’s always worth asking to see if there’s anything that they can do. And ultimately you can decide if you want to cancel the card entirely, you can always do that and get a new, no annual fee or lower annual fee option that might be a better fit for your particular lifestyle.
Jeffrey Snyder, Broadcast Retirement Network
How many, as the rule of thumb changed, you know, I, like I said, I’ve got several cards and I don’t, we’ll get the loyalty and rewards in a, in a few minutes, but there’s everyone and their mother offers a card. I mean, you mentioned Delta, American express, uh, gas, uh, gas stations, gas providers, uh, offer cards. How did, how many cards do you need in today’s day and age?
Um, and, and also does it make sense to diversify? So using a shopping card from the whole foods, for example, versus the credit card from the gas station.
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah, it’s all a matter of personal preference and looking at where you’re spending your money and where you’re going to get the most value. Generally speaking, I think the majority of consumers would be great with a single credit card or even a two or three. Um, now I personally have many more than that, but of course that’s part of my full-time job is to test out all of these benefits.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. You get to test out a hundred cards.
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah. So I actually have 28 open and active credit cards right now. Um, which is more than the average person should be using.
Um, but the key thing is to really evaluate where you’re spending your money to make sure you have cards that will ideally give you potential bonus rewards on those types of purchases. So for example, if you know you have a big family, you’re not huge into travel, but you spend a ton on groceries every month, get a card that gives you a good bonus on groceries. Whether that’s cash back, whether it’s extra points, extra bonus miles.
If you’re someone who’s like, no, I love luxury travel. I want access to an airport lounge. Look at a card.
That’s going to give you those luxury perks. Um, the issue with diversification is there is such a thing as too much diversification, if you wind up having six, eight, 10 credit cards, you might wind up with 12,000 points here and 8,000 miles here and, you know, $62 in cashback rewards here, and it’s kind of hard to sometimes pull those together to actually turn it into a meaningful trip or a meaningful reward. So diversification can be great, but you really want to analyze your own personal situation to decide, you know what, am I always going to that gas station?
Maybe that is a good option for me. Am I always flying with that airline? Maybe that card is a good option for me.
But if the answer to that is no, that you’re not really loyal to a specific brand, then you generally want more of a general purpose card. That’s going to give you rewards on all purchases, no matter which gas station or airline or hotel chain or grocery store you’re actually going to.
Jeffrey Snyder, Broadcast Retirement Network
So let’s talk about, I wanted to get to those pay over time, but let’s, let’s come back to that if we have time, because I want to talk about the loyalty explosion, everybody, as I said, that everyone offers a car, but they’re also offering these loyalty programs. Like if I use your card and I use your service, I get something back. How, how big is that?
Cause it, it was big. Then I saw some contraction, at least from what I read in different periodicals, uh, saying, you know, rewards come and go. How is that blowing up again?
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah. So it certainly seems like every place you go these days has a loyalty program. I was just out to dinner last night with my family and our local restaurant was encouraging us to sign up for their loyalty program.
Um, and of course I did, again, it’s part of my job, but these are really interesting, uh, kind of races to capture your business. Um, a lot of these, you know, even small kind of mom and pop shops or restaurants, uh, or coffee shops are really saying, you know what, if we offered maybe someone, even just a $5 reward for every $500 they spend with us, that could be enough to make them choose my place over the place down the street that offers a similar kind of experience, but maybe doesn’t have a loyalty program. So I think there is a real competition here.
And by joining these programs, the way I view it, they’re all free. They oftentimes do incentivize you to, you know, come back and see them. Oftentimes you sign up for them and then maybe you’ll get a text three weeks down the road being like, Hey, come in today and you’ll get a free appetizer with the purchase of an entree that could lead you to say, you know what, I’m going to dine there tonight.
I was already planning on going out. I’m going to pick that restaurant over a different one simply because of that offer that they gave me. So, um, I think is it’s really little risk and all upside when it comes to joining these programs, especially if it’s at an establishment that you’re going to on a regular basis.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I guess the only risk is that you get bombarded by texts and emails. You know, Nick, I eat a lot of grilled chicken. I wish that Tyson or Purdue had a grilled chicken rewards card because that’s really all I eat.
So then maybe there’s an idea out there if they’re watching the show. Let, let me come back to, uh, let’s finish off this episode with either buy now, pay later or pay over time. Does every credit card give you the opportunity?
Because let’s face it. Times are tough. We’re all struggling to make ends meet higher gas prices, higher food prices, you name it, it’s all going up.
Are, are, are more credit cards offering this feature?
Nick Ewen, Editor-in-Chief, The Points Guy
Yeah. So it’s interesting because we see this not just on credit cards, but even during the checkout process at a merchant where you can actually choose to finance these through a firm and through, you know, various other Um, and I, I love flexibility. I love the ability to offer flexible payment plans to consumers that are potentially not able or struggling to make ends meet, I think the big thing is read the fine print.
Make sure you understand the full terms of what you are signing up for. Oftentimes there are situations where they offer a 0% interest, a 0% fee, where they’re essentially saying, look, we want you to make this purchase. And if you paying in full right now is going to stop you from making that purchase, we would rather have you pay in six monthly installments than not make the purchase at all.
Now, of course, other times there may be options where they say, okay, we are going to do six monthly installments, but we’re going to charge you a 5% fee every month. That is again, up to you to decide. Is that something that is worth doing?
Now, if you just charge it to a credit card, a lot of credit cards these days have interest rates that are in the upper 20%. So if you better charge something and pay your minimum payment on your credit card, that may not be the best option. Instead, you do want to explore some of these possible flexible payment options that do allow you to spread things out with either a lower fee.
Or in some cases, there are options to do so with no fee. Just make sure that you have it set up to pay off in full by the time that promotion runs out. Cause some of these, uh, uh, issuers will actually do what’s called deferred interest instead of a waived interest or no interest.
That means if you don’t pay it off by the end, you actually wind up paying interest on the entire purchase from the moment you made it. So again, critical to read the terms and understand exactly what you are signing up for. Absolutely.
Absolutely.
Jeffrey Snyder, Broadcast Retirement Network
Well, Nick, thank you so much for doing double duty. Really? There’s so much to cover and look, I appreciate you coming on the program.
You, you do a great job at the points guy, as you know, and your team does a great job. And look, we look forward to bringing you back on the program again, very soon, sir.
Nick Ewen, Editor-in-Chief, The Points Guy
Sounds good. I’m happy to do it anytime.