I use this 8-item checklist at the beginning of each year to make sure I'm getting full value from my travel credit cards

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I use this 8-item checklist at the beginning of each year to make sure I'm getting full value from my travel credit cards
caroline lupini olinda brazil

Courtesy of Caroline Lupini

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Caroline Lupini in Olinda, Brazil.

It's hard to believe that it's already 2020, but here we are! Every new year, I review my credit card portfolio and decide whether it still makes sense to keep each card. I spend more than half of the year traveling, and I have several rewards credit cards that charge annual fees. In fact, I pay more than $4,000 in annual fees for cards that save me serious money on my travels, but that doesn't mean I'll keep a card if it isn't pulling its weight.

Here's the list of things I evaluate to help make decisions about which cards to keep, which ones no longer make sense, and to make sure I'm getting as much value out of my credit cards as I can.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back.

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Is the annual fee still worth it?

As with everything else in the economy, the trend with credit cards seems to be slowly raising the price and while making small additions to the benefits list. But increased annual fees aren't always worth it. Did the annual fee for your credit card go up $100 while adding fees for guests at airline lounges? Consider whether paying that new, higher annual fee is worth the benefits that come with the card.

Don't forget that there are many solid rewards credit cards that don't charge an annual fee, including:

Did any card benefits change?

Did your bank remove the vast majority of travel protections, even from the most premium, travel-focused cards? Did a three-hour limit get slapped on your lounge access (ahem, Amex cards)?

Every year, valuable card benefits change. Sometimes these changes matter given your personal usage pattern, but other times they may not. Review each card, and consider whether it's worth renewing.

Am I using most of my card's benefits?

You shouldn't sign up for a new credit card without a plan to maximize its benefits. However, in practice, it's rare to utilize each and every perk.

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Be brutally honest with yourself. Are you really using the valuable benefits (such as a fourth hotel night free with the Citi Prestige® Card and Uber credits or airline fee reimbursements with the Platinum Card from American Express) that you're buying with a hefty annual fee?

If the answer is no and you don't expect your life to dramatically change in the next year, you're probably paying for benefits you won't use. Consider whether the card is still a good deal given that.

Duplicate card benefits

It's easy to end up with three different credit cards, all of which include a Priority Pass Select airport lounge membership as one of the benefits. When I look at my card portfolio, I always note which benefits are duplicated. If I'm "on the fence" about a given card, I'll be much more likely to dump it if one or more benefits is duplicated by another card that I carry.

Program changes

Most of the cards I carry are associated with a loyalty program - either one run by the bank, such as Chase Ultimate Rewards, or by an airline, such as United MileagePlus. Loyalty programs can change throughout the year, and these changes can make a program more or less valuable.

For example, removing a valuable transfer partner can reduce the value of a bank's loyalty program, and switching to a dynamic award chart without fixed mileage rates can reduce the value of an airline's loyalty program. We saw negative changes to both bank and airline loyalty programs in 2019, as well as positive changes like the addition of JetBlue as a transfer partner for Capital One miles.

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The core value of a co-branded credit card is the benefits in its associated loyalty program, so be sure that the benefits are valuable enough to justify the annual fee.

Do I need to hit any spending thresholds to earn benefits?

Some loyalty programs offer valuable benefits when you meet a spending threshold on a cobranded credit card. For example, in the Delta SkyMiles program, if you charge $25,000 or more in a year to a Delta credit card like the Gold Delta SkyMiles® Credit Card from American Express, you can waive the Medallion Qualification Dollars (MQD) requirement for Delta elite status, up to the Platinum Medallion level of status. (For the highest tier, Diamond Medallion, you'd have to spend a whopping $250,000 on a Delta credit card to waive the MQD requirement, which is a much lower $15,000).

Don't forget about airline credit cards that offer companion ticket benefits, like the Travel Together ticket you can earn after spending $30,000 in a year on the British Airways Visa Signature® card. Plus, some hotel cards like the Hilton Honors American Express Surpass® Card offer a free weekend night certificate for meeting an annual spending requirement - in this case, $15,000 in a year.

Presuming that the loyalty program is valuable enough for you to put spend on a cobranded card, are the thresholds still achievable given your planned spending patterns this year?

More importantly, is the benefit you're getting from putting spending on a cobranded card worth the flexibility you're giving up by putting spending on a card with transferable points? For example, will the free weekend night you get with the Hilton Surpass card be worth putting at least $15,000 of spending on the card this year, especially when you could be earning more valuable transferable points with a card like the Amex Platinum?

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Are there any cards I should downgrade?

If I decide that I no longer want a certain card, before closing it I consider the potential impact to my credit score. If you close an account, it shortens the average length of time you've had an account, and it also changes your available credit (if you have outstanding balances, your ratio of balance to available credit can negatively change).

Some card issuers will allow you to downgrade an existing card to one with a lower (or no) annual fee. If it's an option, I do this rather than close a card entirely. That said, I never hesitate to close a card if it doesn't make sense for me to carry it anymore. We're not talking major changes to your credit report - they're minor, and for the most part, temporary.

Assess annual credits

Many cards, especially premium cards, offer some type of annual statement. The Amex Platinum card, for example, offers up to $200 in airline fee credits and up to $200 in Uber credits each year, as well as up to $100 in Saks credits.

At the beginning of each year, it's always a good idea to go through all of your credit cards and create a checklist of the annual benefits offered by your cards so you don't accidentally forget to use them.

Click here to learn more about the Platinum card from American Express »

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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