CSP - How much to account for the annual fee?

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sez
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CSP - How much to account for the annual fee?

Postby sez » Mon Jan 27, 2014 10:49 am

I am strongly considering the CSP. My question though, is about how much would you need to spend to compensate for the $95 fee via rewards points.


Robrus1
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Postby Robrus1 » Mon Jan 27, 2014 11:00 am

Depends. Spending nothing on 2X categories and only at 1X and redeeming points at a 1 point per dollar redemption rate would mean you'd need to spend $9500 to break even. You can earn UR points through the UR mall, on dining, and traveling much faster though, and that's not counting the signup bonus, which by itself makes the first year or 3 well worth it IMO.
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MemberSince99
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Postby MemberSince99 » Mon Jan 27, 2014 12:44 pm

Also don't forget the 7% annual dividend bonus. With any decent spend at all, that should cover the annual fee.

sez
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Postby sez » Mon Jan 27, 2014 2:19 pm

Thanks for the replies.
Would you consider around $5k to $6k on traveling and restaurants a decent amount? On a relatively quiet year this is what I'd expect. Also considering I usually eat out at least once a week I would say my actually spending will be more around $8k or $9k when all is said and done

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djrez4
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Postby djrez4 » Mon Jan 27, 2014 4:11 pm

MemberSince99 wrote:Also don't forget the 7% annual dividend bonus. With any decent spend at all, that should cover the annual fee.


I think you're still confuzzled about the dividend; it doesn't amount to much. Chase gives you 7% of the points you earned, not an extra 7% of the money you spent.

If you spend $10k at 1x and earn 10k points, your dividend is 7% of 10k - 700 points or $7.



It's decent. Remember, making up for the annual fee is all fine and good, but you want the card to earn rewards for you, not just pay its own fee. Think about it this way:

CSP - $10k spend at 2x = 20k points. Subtract the $95 fee (9500 points) and you end up with 10,500 points ($105).

CS - $10k spend at 1x = 10k points. No annual fee to subtract, so you end up with 10,000 points ($100).

Would you pay $95 for 500 points ($5)?

To make the math work, you need to spend at least $14,500. That's just come out $95 ahead of the regular CS. And, recall I'm saying all of the CSP spend is 2x and all of the CS spend is 1x. That won't be the case. Assume about $20,000 total spend to make the CSP worth it.

UNLESS: you value the ability to transfer points to airlines and hotels. You can't do that with the CS. That may be worth the price of entry. You may also consider that the 40k bonus points sort of pay the fee for four years.
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JoDa
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Postby JoDa » Mon Jan 27, 2014 8:53 pm

Also consider foreign transaction fees if your travel is out of country. These can be substantial. On 2-3 week work trips (company picking up the tab), I'd often rack up $100 in foreign transaction fees. But, if most or all of your travel is domestic, then that's no benefit.

Personally, I value the ability to convert to miles/hotel points the most, as dj noted. I recent booked a fairly expensive vacation on miles and got deals on everything far and away better than what points would have gotten me. For example, the $350 plane ticket was only 20K miles. Even with the UR discount, that would have cost me 28K points. Considering that's $4-8K of spending, that's a BIG feature. But you have to decide if you can benefit from that.
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Postby MemberSince99 » Mon Jan 27, 2014 10:43 pm

Good points djrez and JoDa. I guess you just have to look at your potential spending for rewards as well as the features of the card, and decide if it's worth it for your anticipated use.


I'd love an Amex Platinum but frankly I just could not make proper use of it and thus I'm not the target market for the card and I would not get value from it. So I weighed the cost vs what rewards and benefits I'd get and since I don't fly much, it's just not worth it for me. If you do fly a lot and can make use of it, then it is worth it.

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Postby freyj6 » Tue Jan 28, 2014 5:50 am

It's a bit more complicated than that.

If you're just redeeming for cash/statement credit, your rewards rate is 1.07 and 2.14 respectively. If that's the case, there's really no reason to get the CSP (unless you're going for the signup bonus and the dropping it). The Cap One Quicksilver card has a 1.5 base rate, no annual fee and also has no foreign transaction fee -- so you'd have to spend close to $12,000 in bonus spending on the CSP just to break even with that hard. But that's ignoring the fact that you're losing value on everything except travel and dining.

If you're redeeming for travel, the rewards rate is a bit better, because you get 25% off travel booked through chase (when you use points). That takes your rewards rate to 1.34 and 2.68 respectively. If you're a big spender on travel and dining, it becomes a pretty good deal. Still, if you don't do international travel, you'd probably be much better off with a dining card like USbank Cash+ (rewards rate between 5% and 6.25%), and then putting your other spending on a no annual fee card.

Third option: if you travel a lot and make good use of Chase's transfer partners, the rewards rate is even better. Depending on how good you are at using miles (and whether the trips you want to take line up with the right carriers), you can get a rate of as high as 2 to 1. That means a rewards rate of 2.14 and 4.28 respectively -- IF you always manage to maximize, which is rather unlikely. More likely you're looking at closer to 1.8 and 3.5. Either way, if you use the transfer partners well and you travel internationally, CSP becomes a great card.

Finally, if you also use the Chase Freedom (and use Chase's miles transfer partners with CSP) that's where CSP really shines.

Because you can transfer points from Freedom to CSP Ultimate Rewards (and then to carriers), you'll earn between 6.25 and 10 percent rewards on your Freedom category spending.

For example, if you spend $500 on gas in the first quarter of 2014, you'll get $25 with Freedom, which can be converted to ~$50 in travel through CSP's transfer partners, so you just earned another $25 by having CSP. If you were to spend, say, $2000 on category spending on the Freedom throughout the year, the CSP's annual fee would pay for itself.

In conclusion, CSP is one of those cards that can be REALLY good if you use it correctly and your spending habits fit with the perks of the card. But if you're just using it for statement credit, or even occasional travel, there are better options.
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freyj6
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Postby freyj6 » Tue Jan 28, 2014 5:51 am

It's a bit more complicated than that.

If you're just redeeming for cash/statement credit, your rewards rate is 1.07 and 2.14 respectively. If that's the case, there's really no reason to get the CSP (unless you're going for the signup bonus and the dropping it). The Cap One Quicksilver card has a 1.5 base rate, no annual fee and also has no foreign transaction fee -- so you'd have to spend close to $12,000 in bonus spending on the CSP just to break even with that hard. But that's ignoring the fact that you're losing value on everything except travel and dining.

If you're redeeming for travel, the rewards rate is a bit better, because you get 25% off travel booked through chase (when you use points). That takes your rewards rate to 1.34 and 2.68 respectively. If you're a big spender on travel and dining, it becomes a pretty good deal. Still, if you don't do international travel, you'd probably be much better off with a dining card like USbank Cash+ (rewards rate between 5% and 6.25%), and then putting your other spending on a no annual fee card.

Third option: if you travel a lot and make good use of Chase's transfer partners, the rewards rate is even better. Depending on how good you are at using miles (and whether the trips you want to take line up with the right carriers), you can get a rate of as high as 2 to 1. That means a rewards rate of 2.14 and 4.28 respectively -- IF you always manage to maximize, which is rather unlikely. More likely you're looking at closer to 1.8 and 3.5. Either way, if you use the transfer partners well and you travel internationally, CSP becomes a great card.

Finally, if you also use the Chase Freedom (and use Chase's miles transfer partners with CSP) that's where CSP really shines.

Because you can transfer points from Freedom to CSP Ultimate Rewards (and then to carriers), you'll earn between 6.25 and 10 percent rewards on your Freedom category spending.

For example, if you spend $500 on gas in the first quarter of 2014, you'll get $25 with Freedom, which can be converted to ~$50 in travel through CSP's transfer partners, so you just earned another $25 by having CSP. If you were to spend, say, $2000 on category spending on the Freedom throughout the year, the CSP's annual fee would pay for itself.

In conclusion, CSP is one of those cards that can be REALLY good if you use it correctly and your spending habits fit with the perks of the card. But if you're just using it for statement credit, or even occasional travel, there are better options for cards.
Current Strategy

Chase Freedom + Discover IT + Churning

JoDa
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Postby JoDa » Tue Jan 28, 2014 6:48 pm

Just to give a monetary example, if you spend about $3K out of country, you will cover your fee in foreign transaction fees. KEEP IN MIND that if you book a hotel online, you may only "officially" spend the deposit (often only ~$200) in the foreign country, the rest is billed through their web service as a domestic transaction. This generally applies if you pre-pay, especially for non-refundable rooms.

If you have any travel you know you'd like to do, maybe poke around the various airline's rewards sites to see what kind of mileage rates you can get. Because I nailed down a $350 flight and 6 nights in a 4-star hotel for just about 100K miles (cash value approximately $1900, point value approximately 150K w/UR discount), I know the value of being able to convert to miles is high for me. May not work out as well for others. Just depends on where you want to go and how many emails you're willing to wade through to find out when airlines or hotels are having "rewards sales." Keep in mind these often require booking far in advance. Sure, you can get a refund, but you can't convert the miles back to points or transfer to another airline/hotel group. I'd say a job where your vacation time is flexible is probably the biggest factor in whether you can take advantage. I can book a vacation for August in January and be all but guaranteed the time off; other people, not so much as projects are assigned on shorter deadlines and/or there's no one to cover.
CSP $19K
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Target Visa $1.5K



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