Having 21 credit cards isn't cheap, but for Nick Ewen, a senior editor at the credit-card site The Points Guy, it's worth it: "I'm not only covering the $3,800 in annual fees that I'm paying, but getting much more than that amount in value, year in and year out," he says. "I would estimate that with the credit cards that I have, solely based on the benefits and perks of these cards, I'm easily getting over $10,000″ a year.
To figure out whether his cards' rewards are outpacing the annual fees, Ewen checks three important metrics: "What I will typically do when the annual fee comes due on a credit card, that's when I will go ahead and do the calculation for how much I got out of that card over the course of the year."
Here are three measures Ewen looks at to figure out the value of his credit card rewards.
When calculating a credit card's value, you'll want to figure out how much a point or mile is worth. That number varies widely depending on what type of card you have. The Points Guy has a chart, updated monthly, to help you figure out what the value of each point or mile is worth in various brand and credit-card programs.
"Most cards make it relatively easy to look at your total spending and your total earning over the course of the year," Ewen says. "And I'll say, 'Alright, this year on this card I earned 20,000 points, and I think those points are worth one cent a piece, so that's basically $200 of rewards that I earned simply by using this credit card."
Video by Mariam Abdallah
After determining what the card's points or miles are worth in terms of dollar value, you can look at the card's automatic benefits. For example, hotel-branded cards often include certificates for a free night. "I'll take a look at what the value was that I got from the particular certificate in the previous year, knowing that I can most likely replicate it in the years to come," Ewen says.
"Any of the automatic benefits that are included on that card have an easy dollar amount to it," he adds. "So an example would be a lot of the hotel credit cards will give you a free annual night certificate, just by renewing your card."
The key to these automatic benefits is making sure you're using them. Ewen makes sure to redeem his by setting up calendar reminders and diligently keeping a ledger of his rewards. "I just had a card renew that had an annual certificate that I used to stay at the Westin at the Denver Airport prior to a morning flight home from a trip," he says. "The room would have been something like $270 a night, and it was completely free because I used that certificate."
Aside from reward miles and travel perks, many cards also have "fringe benefits," Ewen says. "These offers can come and go, so I typically view these offers as almost the icing on the cake."
For example, Ewen's wife has been trying to learn a new language and saw a deal on her Chase credit card for the language teaching service Babel. "For a one-year subscription, she got 20% taken off of it, simply because she had that offer on her card," he says.
Ewen logs into his "main" credit card accounts daily to see what deals are available. In order for some of these deals to take effect, you have to add them to your cart or take other steps, Ewen says: "They're not automatic."
Other deals include cash back if you spend a certain amount at specific stores. Ewen nabs discounts at Home Depot, Instacart, and Best Western, just to name a few. "It's all over the place in terms of merchants that are out there," he says.
Additional benefits can be a little harder to quantify. "So for example, on my Chase Sapphire Reserve, any time I rent a car, I get primary car rental coverage," Ewen says. If an accident results in "damage done to the car, as long as I paid for it with the Chase Sapphire Reserve and I waived the additional coverage that the rental car company provided, all that damage is covered completely by Chase's benefits administrator."
And he wouldn't have to file a claim with his personal auto insurance policy, which could increase his premium. The insurance coverage isn't necessarily worth the card's annual fee of $500 per year, "but that peace of mind is definitely a nice thing to have," Ewen says.
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