It’s common for credit cards that offer some kind of annual credit to issue this on a calendar basis. That means every year, defined as January through December, you get to redeem your credit. This creates a unique opportunity during the first time you open an account. You probably didn’t apply for your card on January 1, which means — per the terms of the card agreement — you can get two travel credits while paying one annual fee.
Unfortunately Chase will finally clamped down on this great opportunity. The offer agreement on new applications specifies that credits will be offered each cardmember year, beginning with applications on May 21, 2017. That means the clock resets each time you pay the fee, whatever month that is. No more double dip. Like Chuck at Doctor of Credit, I’m surprised Chase didn’t do this from the start.
From the terms and conditions (as of May 17, 2017):
$300 Annual Travel Credit: A statement credit will automatically be applied to your account when your card is used for purchases in the travel category, up to an annual maximum accumulation of $300. Annual means the year beginning with your account open date through the first statement date after your account open date anniversary, and the 12 monthly billing cycles after that each year. (For applications submitted before May 21, 2017, annual means the year beginning with your account open date through the first December statement date of that same year, and the 12 billing cycles starting after your December statement date through the following December statement date each year.)
Existing card members are grandfathered into the old terms, but new applicants will be out of luck. Or, apply before the new terms take effect to get the more generous terms available today.
Some other cards like the Amex Platinum Card continue to offer their credit on a calendar year basis. It’s something to look for carefully when reading the terms and conditions of any new credit card application.
Does It Matter?
If this change is a little confusing, here’s some math to help you see the magnitude of the difference between each offer. Consider two hypothetical scenarios.
In the first, you pay a $450 annual fee when you sign up in July 2016 and hold the card for one year before you change your mind and cancel in June 2017. Under a calendar year rule, you get a $300 credit in 2016 and a second one in 2017. $600 in credits for one $450 fee. If you decide to hold the card two years before canceling, you pay $900 in fees and collect $900 in credits.
Now consider a cardmember year rule. You pay $450 when you sign up in July 2016 and hold the card for one year before canceling in June 2017. But this time, the clock on the travel credit starts ticking immediately. You get just one $300 credit. If you want a second credit you’ll need to wait until July 2107 …after you pay a second annual fee.
Over the long term, however, the difference is miniscule. That probably applies to me, as I actually find this card valuable. For example, over 10 years the calendar year rule give someone $3,300 in credits for $4,500 in fees — a ratio of 0.73. The cardmember rule gives someone $3,000 in credits for $4,500 in fees — a ratio of 0.67. But for shorter terms, yes, this isn’t nearly as a good a deal.
