What Happens Year 2?

A plan for Year 2 and Beyond

I often get Slack/Twitter DMs with the same question.  What happens year 2?  Most subscribers see a clear path to $10K+ in their first year, but are unsure about what happens after that.

Obviously, the whole goal of this is to generate an additional income stream, so we only want to hold on to cards that will help us profit.  If we are losing money on a card, it doesn’t make sense to keep.  However, there are a few options to explore before canceling, as we only want to cancel a card as a last resort. 

*Note* One of my Twitter followers sent me the below video, and told me how it helped him understand the game better, as he is a visual learner. This guy explains the basics pretty well, so worth checking out to get a better understanding.

Retention Offers

Before canceling/downgrading any card, always call the number on the back of your card and ask to speak to a retention specialist to see if there are any retention offers available.  Retention offers vary.  Sometimes it might be worth a fraction of the annual fee, other times the annual fee might be waived entirely.  Amex is notorious for often giving out generous retention offers that help offset the annual fee.

Example: You have the Amex Business Platinum card that has many benefits you like, but a hefty annual fee.  You might really like the 35% airline bonus and be able to use most of the credits, but still find the annual fee a bit too much.  If a retention specialist offered you 45,000 MR (worth $495 via Schwab cashout), that would make the card definitely worth holding on to.

Downgrade/Product Change card

You’ll generally need to wait at least one year before downgrading or product changing your card.  This often makes sense when you sign up for a card with a big sign up bonus and high annual fee.  You can either downgrade to a lower annual fee, no annual fee card, or product change to a similar card.

Example: You get a personal Amex Platinum and get a big sign up bonus.  You maximize all the credits, use clear, sign up for global entry, etc, and you make a nice profit in year 1, but can’t justify paying a $695 annual fee in year 2, when you won’t be getting a sign up bonus.  In this case, you can downgrade your Platinum to a Gold ($250 Fee) or a Green card ($150).  The Gold card could be a great option here, especially if you can use the $120 annual Uber cash.  The gold also offers 4X on groceries (up to $25,000 each year) and uncapped 4X on restaurants.  For the paid subscribers that are using the MS methods discussed in earlier posts, this card is a no brainer as you can easily MS both groceries and restaurants online, without leaving your house.

Let’s take a look at the cards we’ve discussed in previous posts.  Here’s how I would treat each one after year one.

Chase Ink Cash

-One of my all time favorites.  No Fee, and easy manufactured spending for 5X Ultimate Reward points on office supply stores (up to $25,000 per year).  I’ll keep this card forever.  It NEVER makes sense to cancel a no-fee card.  

Chase Ink Preferred

-Business card with 3X category bonuses and a $95 annual fee.  Could make sense if you have lots of social media ad spend, but I would convert this after year 1 to an additional no-fee Chase Ink Cash.  With easy office supply MS and two Cash Inks, we can earn $3,125 from these two cards alone (125,000 UR points X 2 = 250,000 UR which can be worth $3,125 if cashed out with PayYourselfBack at the 1.25 cents per point rate)

Chase Sapphire Reserve/Preferred

-I have the Reserve and will keep it until I die.  With 3X UR points on restaurants for each card, and HBFC offering items that code as restaurant spend, I’ll earn a plethora of UR points with this card alone.

Amex Personal Platinum/Schwab

I’m keeping the Schwab as I generate a ton of Amex points each year, so I like to have the ability to cash out quickly at 1.1 cents per point.  I also use most of the benefits, so it helps offset the annual fee.  The personal platinum I’d downgrade to the Amex Gold.  The ability to get 4X MR points on grocery and restaurant MS, and the Uber credit make this a fantastic card that I’ll keep forever.  

Citi Premiere

$95 annual fee for a card with 3X hotel, flight, groceries, and gas.  This card allows me to get 9.25% on all hotel, flights, grocery, and gas purchases with the trick below.  Needless to say this card is a huge moneymaker and I’ll hold onto it forever.

How I get 9%+ cashback on EVERY dollar spent

Citi Double Cash

No fee, 2% on everything and the ability to earn 8.25% on all purchases with the trick below.  Another no-brainer card that earns some solid cash back each year.

How I get 9%+ cashback on EVERY dollar spent

Amex Gold

See above.  Lifetime keeper card with fantastic MS options.

Amex Business Platinum

Usually has a huge sign up bonus, but not worth keeping long term.  Use the credits in the first year (including the $400 Dell credits) and resell the Dell items you bought.  Downgrade to the Amex Business Gold where you can get 4X on social media ad purchases, gas, restaurants, and more (4X on top 2 spend categories)

So now what?

By the end of this year, you should be more comfortable with all aspects of this game.  You should have spreadsheets and records of all your cards.  You should have some solid manufactured spending (MS) techniques down to a science.  This will enable you to hit minimum spending requirements quickly and with ease.

The goal after year 1 (and beyond) is to establish a baseline of profitable cards that you will keep long term.  Remember, there is rarely ever a situation where it makes sense to cancel a card.  With just two Chase Ink Cash cards you could generate $3,000+ with some basic MS.  With a few more cards like the Chase Sapphire Reserve, Amex Gold, and Citi Premier, you could easily get this number closer to $5,000, and make this your baseline each year.  Starting with a $5,000 baseline each year, you would only need $5,000 more to get to $10,000.  After locking down some solid cards starting with Chase and Amex, there are plenty of other cards with enticing sign up bonuses from Citi, Bank of America, Capital One, and more. We’ll discuss these in a later post. 

I’ve been at this game for over 6 years, and still constantly find cards worth applying to.  Including employee cards (in my own name), I have over 250 credit cards, so this game definitely doesn’t end after year 1. The journey is just beginning.

Slack 

If you’re a paid subscriber, don’t forget to sign up for the Slack channel.  DM me on Twitter with the email you signed up with for Substack, and I’ll send you an invite.  Over the next few days, I’ll upload some of the spreadsheets I use to keep a record of everything.  This will make it easier to stay organized.

Feel free to ask questions in the comment section below, except for MS related questions.  Please save any MS related questions for the next paid post or the Slack channel. If you have any questions about keeping a card or downgrading, ask away!

Disclaimer: None of this is to be deemed legal or financial advice of any kind.