The US credit card game is a fun little optimization problem where the rewards can include free* travel, fancy hotel stays, and first-class flights.

Here’s an example subproblem from the midgame.

Downgrading my Chase Sapphire Reserve

Why?

I’m paying to keep the Reserve (or CSR) and I’m not getting enough value out of it for what I’m paying. And I can downgrade the card to a Freedom Flex which has no annual fee (meaning I can replace this expensive card with a no-cost one, without needing to cancel the card).

Why not cancel the card?

In the US credit system, one metric your credit score is based on is Age of Oldest Account. Cancelling a credit card wipes out the history of that line of credit, which can hurt your credit score if it’s your oldest account. So it’s generally recommended to downgrade to a free card if you can (which keeps your line of credit alive), instead of cancelling your card.

Why downgrade? (cont’d)

I think the CSR is still worth keeping if you have a lot of Chase Ultimate Rewards points (“UR points”) or you have a lot of spend on Chase cards to generate UR points. And you’re enjoying the card’s other benefits.

In my case:

• My Effective Annual Fee is high

• I only have 20,000 UR points ($300-400 value for travel), which I plan to spend in the next few months

• I’m no longer generating a lot of UR points from regular spend (I’m using other cards for most categories I used to use the CSR for)

• I think a new big sign-up bonus offer for the CSP/CSR may be coming (80,000+ points?), and I’ll be eligible for this since I’m past the 48-month rule. So I’ll be reapplying for one again anyway, if the sign-up bonus is worthwhile

Number-crunching

Effective Annual Fee

CSR annual fee = -$550

Benefits I use = +$400

• $300 travel credit
• 10x on Lyft = ~$100 in value to me (see details below)
• Global Entry / TSA Pre / Nexus credit = $0, I’ve used this + I get this from other cards too
• Lounge access = $0, I get this from other cards too
• Travel and purchase protection = $0, I get this from other cards too
• Daordash dashpass + credits = $0, I don’t order delivery

-> Effective Annual Fee = -$150

Categories and Spend

The CSR useful for:

• 3x on Restaurants
• 3x on Flights
• 3-10x on Ride-share, 3x on other misc travel (like car rentals)
• No foreign transaction fees
  • Pair this with 3x on Restaurants and this means 3x on dining internationally
  • As a Visa card, this is a good and safe option for international spend (vs say an AMEX that might not be accepted overseas)
• Chase UR portal means UR points are worth at minimum 1.5cpp (cents per point)
• Chase UR transfer partners (like Hyatt), where you can get ~2cpp

My lineup

*Hyatt 2x only for ride-share
⁺There’s a few some subcategories and cards under “Misc.” but rolling it all up into here for simplicity

No Points

The only category I really use my CSR for now is Misc. Travel (“Ride-share + car rental + other travel”), where I’m spending at most $200 per month, or $2,400 per year. Points-wise, I’d estimate this generates 10,000 UR points annually (~4.17cpp).

I do also earn 1.5x UR points from my Freedom Unlimited for Misc. purchases. Let’s say this is a generous $10,000 in spend annually, which means 15,000 UR points.

So that’s maybe 25,000 UR points generated per year = $375-500 in value.

But there are alternatives for both Misc. Travel and Misc spend:

• My Hyatt card gets me 2x back on ride-share and commuting, so I’d earn 4,800 Hyatt points, which are roughly 1:1 with UR points (so I only really benefit from +5,200 UR points by using the CSR ~= $100)
• I can earn 1x back on Misc. spend -> for simplicity, let’s also say this is also via Hyatt for 10,000 Hyatt points

Which means with other options, I still earn ~15,000 points = $225-$300 in value.

Factor in my plans to reapply for the CSR if/when a new big sign-up bonus offer comes along, and there’s not much benefit for me to hang onto the card.

The Game

I’ll admit, all this number-crunching is effectively over some $100-$200.

But the credit card game runs deep if you want to play it, where you can have 5+ cards that each give you some $500-$1000 in one-time sign-up bonuses, and $100-$200 in net value annually. Stack these up for a stay in the Maldives or a round trip first-class flight to Singapore paid with points.

Let’s chat! I’d love to hear your thoughts on twitter or by email at [email protected].