Home > British Airways, Chase, Credit Cards > I paid an annual fee … and I’m okay with it.

I paid an annual fee … and I’m okay with it.

Well, I sort of paid it.

I opened the British Airways Chase Visa last year, when the bonus was 100,000 miles for $2500 of spending (the bonus is currently 50,000 Avios points, plus 25K for $10K spending in a year, plus another 25K for $20K spending in a year).

The card is great in that it has:
– No foreign transaction fee (my Chase Sapphire Preferred also has this)
– Smart-chip for certain foreign transactions
– 1.25 Avios per dollar earning rate (which my Chase Freedom often beats with its 1.1x + 10 earning rate, for purchases under $66).
– Travel Together Ticket for spending $30K in a year (which I’ll never reach)

These are great features, but as you can see, the only novel thing that interests me is the smart-chip. Not only that, put I paid the $95 annual fee last year to get the 100,000-mile bonus, so I wasn’t interested in another fee.

My annual fee was coming up and I called Chase to threaten to cancel it. The rep rattled off some benefits of the card, but I resisted keeping the card, stating that the annual fee just wasn’t working for me. The rep ended up giving me a $95 statement credit that posted before my last billing statement, which means I could have taken the $95 and run before they charged the annual fee it was meant to get rid of.

I later received a letter in the mail stating that from April 1 to June 30, I would earn 2.5 Avios forevery purchase up to $8000. That’s 10,000 bonus Avios. The only thing is that I would have to keep my account open, meaning I’d have to pay the annual fee.

For most 1x purchases, I currently use my Chase Freedom which earns 1.1x + 10 — there are better cards, like the SPG Amex, but this is what I have. For travel/dining, I tend to use my Chase Sapphire Preferred since it earns 2.14x. I’m swimming in United miles at the moment, so I would probably send some of those points towards BA for a redemption I have my eye on. Therefore, 2.50 Avios would beat 2.14x UR points transferred to BA.

I figured that with some spending shifting, I could put about $5,500 on the card without forgoing 5x bonuses on my Freedom. That would earn me 6,875 bonus Avios points (the bonus 1.25x on top of the base 1.25x). Since I value Avios points at 1.3 cents per point, those points are worth almost $90 to me, very close to the $95 annual fee.

Not only that, but British Airways has run the NYC Michelin Dining promotion twice in the past year. If you haven’t heard of it, it gives you a $50 credit whenever you spend $50+ at a Michelin-rated restaurant in New York City during the promotion, redeemable twice per promotion. In the fall, I used it at The Spotted Pig, while in the spring I used it at Tamarind Tribeca and Laut Union Square. I got $150 back, and while I usually wouldn’t dine at those restaurants without the promotion, I easily value each credit as $20 since it’s still a free meal out. Therefore, those 3 dining credits saved me about $60. I hope BA continues the promotion in 2012 and 2013, because 4 dining credits during the year comes out to a potential $80 saved that I would spend anyway.

Lastly, I think it’ll look good for my Chase account if I keep this card open longer. They have some great credit card offerings and I do not want to end up on their blacklist as somehow who potentially opens cards just for the bonus.

So that’s my cost-benefit analysis. I think forgoing those $95 will pay off in the end.

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