The $400 annual fee recently posted on my US Bank Altitude Reserve Visa Infinite card (USB AR). We performed our usual review of the benefits of the card compared to the annual fee and made a retention call to US Bank.
In general, we were planning on keeping the USB AR card even if we didn’t receive any retention offer, for reasons that we’ll discuss at more length in the article. Fortunately, we received a retention offer of 5,000 US Bank points (worth $75 at 1.5 cents per point). We were hoping we might receive a 10,000-point offer, but we believe that 5,000 points is in line with many other recent data points. The extra 5,000 points easily tipped the balance in favor of keeping the card for another year.
Background of Our USB AR Card
I was approved for the USB AR card in June 2018, so this year was the card’s second renewal. During the first year of holding the USB AR, we spent about $18,000 on the card. At renewal in June 2019, we received a retention offer of 4,000 US Bank points (worth $60 at 1.5 cents per point).
During our second cardholder year, June 2019 to June 2020, we spent about $9,000 on our USB AR card.
Virtually all of our spend has been in the 3x bonus category for mobile payments. Historically, our best and most-often use of the card has been during our European trips. There, we’ve used the USB AR card through Apple Pay, which is accepted almost everywhere in Europe, for almost all of our non-restaurant/non-travel purchases (for the most part, we can earn even more on restaurant purchases using a Citi Prestige at a rate of 5x ThankYou Points per dollar). Obviously, we’re not seeing any international use for the card in 2020.
More recently, we’ve found ourselves using our USB AR card through Apple Pay at Costco and for other retail purchases. Costco in-store purchases require a Visa card and accept Apple Pay, making the USB AR card best-in-class there. We’ve also noticed more widespread acceptance of Apple Pay in the US over the past year, a process that seems to have become even more accelerated during the coronavirus pandemic.
Basics of the US Bank Altitude Reserve
Basics of the USB AR card and its key benefits include:
- Annual fee: $400
- Annual travel credit: $325
- Sign-up bonus: 50,000 points (for $4,500 minimum spend within 90 days)
- Bonus categories:
- 5x US Bank points on prepaid hotels and car rentals booked directly in the Altitude Rewards Center portal
- 3x US Bank points on travel purchases
- 3x US Bank points on mobile wallet spending
- Point redemption value:
- 1.5 cents per point for travel (statement credit)
- 1 cent per point when redeemed for cash or other statement credits
- Real-time mobile redemptions via text message
- Primary auto rental collision damage waiver coverage
- 12 complimentary Gogo Inflight Wi-Fi passes per year
- $100 Global Entry credit once every four years
- No foreign transaction fees
On a temporary basis, from June 1 through December 31, 2020, the USB AR card has some additional benefits for dining:
- 3x US Bank points on dining purchases (including take-out and food delivery)
- Dining purchases (including take-out and food delivery) qualify toward the $325 annual travel credit
Other benefits of the USB AR card include:
- Silvercar rental car discounts of 10-30%
- Register at silvercar.com/partners/vinfinite and pay with your USB AR card
- Access to the Visa Infinite Luxury Hotel Collection
- Priority Pass membership
- Limited to 4 free individual visits and 4 free individual guest visits each year
- Beyond this, PP lounge visits cost $32 per person, per visit
- GroundLink car service discount of 15% plus a $30 one-time credit
- Benefits at Relais & Châteaux hotel properties
- Visa Infinite concierge service
- National rental car Executive status and a limited discount
- Avis rental car limited discount
- Visa Infinite Golf Benefit by Troon
- And other protections and services
Analyzing the “Keep or Cancel” Decision for the USB AR Card
For starters, there are no known product-change options for the USB AR card, so this is a pure “keep or cancel” decision.
Let’s see if the benefits we get from this card justify the $400 annual fee:
- We can get basically face value for the $325 travel credit, as it is applied automatically and is valid for a wide variety of travel purchases, including airfare, hotels, rental cars, and some other travel-related charges
- During our most recent cardholder year, we were even able to redeem our last $180 of travel credit for an American Airlines gift card
- Even if you discount this credit slightly, it’s almost certainly worth at least $300
- Historically, we have used some of the Gogo WiFi passes
- At face value, these could save $150 or more
- That said, we’ll assume for purposes of this analysis that the WiFi passes are worth zero, because (a) travel is quite uncertain at the moment; (b) airlines have cut back on Gogo in favor of other in-air WiFi providers; and (c) for us the card is a keeper even if we didn’t use any of the passes
- The 3x bonus category for mobile payments is a unique benefit that is best-in-class for a wide range of charges that would otherwise be unbonused
- We’ve already discussed several uses for this category:
- Payments in Europe where Apple Pay is almost universally accepted
- Other US retail stores
- For our approximately $9,000 in USB AR charges during our most recent cardholder year, our best guess is that the average next-best alternative would have achieved a return of about 2.5%. That’s 2% less than the 4.5% we received by earning 3x USB points using the USB AR card. 2% additional return on $9,000 spend means that we earned about $180 in additional rewards by holding and using the USB AR card.
- Admittedly, this is a back-of-the-envelope calculation. Our incremental return is higher when using the USB AR card in Europe, where the next-best alternative would return about 1.5%; slightly higher at Costco, where the next-best alternative would be Chase Freedom Unlimited at 2.25% (1.5x Ultimate Rewards points * 1.5 cpp); and lower at other US retailers where the next-best alternative would be the Amex Blue Business Plus at 3% (2x Membership Rewards points * 1.5 cpp)
- Apple Pay has already become much more widely accepted in the US, especially within the past few months; thus, if anything, the extra number of points we can earn should increase this year
- In addition, we have a Samsung Gear S3 watch and loaded Samsung Pay with the USB AR card onto it – this gives us even more options for 3x earning, as the watch emulates a magnetic swipe, allowing payment even at many terminals where Apple Pay is not accepted
- Remember, though, that US Bank is highly sensitive to gift card purchases and manufactured spend, so do not expect that you’ll be able to do any MS activity to increase returns on the USB AR card
- We’ve already discussed several uses for this category:
- Finally, redemptions at 1.5 cents per point for travel purchases are pretty easy using real-time mobile rewards
For us, even with these fairly conservative assumptions, we’d be getting value of at least $480 from the card with little to no effort, easily exceeding the card’s $400 annual fee. And we get this amount of incremental benefit even though we hold other premium cards with good bonus categories, such as the Chase Sapphire Reserve and the Citi Prestige – as well as holding the best card for non-bonused spend in the US, the Amex Blue Business Plus.
As always, you should do the math based on your own circumstances, such as your spending habits and your alternatives for points-earning. But we suspect that the USB AR card would come out a “keeper” – at least by a modest amount – for most people.
Note that it’s also an option to redeem 35,000 USB points for the annual fee, rather than paying $400 in cash. This redemption would give the points a value of 1.14 cents each, well below the 1.5 cents you can readily get by using your points to reimburse travel purchases using real-time mobile rewards. We definitely recommend that you do not use 35,000 points to pay your annual fee!
Our Retention Call
Given our analysis, we already knew that we wanted to keep our USB AR card, but we went ahead and made a retention call to US Bank anyway. As usual, I told the agent that we recently received our statement where the annual fee posted, we’re trying to decide whether to keep the card or cancel it, and we were wondering if there was anything they could do to help make it worth it for us to pay the annual fee and keep the card.
The agent resisted at first and focused on reminding me of the card benefits, especially the short-term dining benefits (3x points and dining purchases qualify for the $325 travel credit). I told him that I understood and appreciate these benefits but continued to gently push for a retention offer. The agent said that he would check for any offers. After a very brief hold, he came back and said that he could offer 5,000 bonus USB points (worth $75 at 1.5 cents per point).
At that point, I thanked the agent and said that I’d accept the 5,000 bonus points and pay the annual fee. The agent read a short disclosure and said that the bonus points will show on our next month’s statement.
I noticed when writing this article that the direction of the retention call was quite similar to last year’s retention call – the agent first balked at my request, I had to politely press a little harder to get an actual offer, and then they offered points.
As we mentioned above, the USB AR card was already a keeper – but the bonus points from the retention offer were a nice little sweetener that made it easier to keep the card. The additional $75 in points from the retention offer brought our annual value for the card up to at least $555, thereby justifying the $400 annual fee. Beyond that, our best guess is that we will use the USB AR card more in our 2020-21 cardholder year than we did in 2019-20.
Hopefully you’ll receive a good offer on your own retention call!
$400 for the USB AR card is a big annual fee, but most of it can easily and quickly be made back by using the $325 travel credit, and for us the additional value we gain through the unique and best-in-class 3x category for mobile wallet payments puts this card in the “keep” category for us. The 5,000-point retention bonus was icing on the cake.
We hope you’ve enjoyed our “Keep or Cancel” article on the US Bank Altitude Reserve card, including our retention call data point, and we hope that it helps you in your own analysis of what to do with your cards. As with every credit card and points-and-miles decision, the underlying factors are different for different people. You have to analyze the situation given your own personal circumstances, and come out with the decision that’s right for you.
What do you think about the US Bank Altitude Reserve card and our “keep or cancel” analysis? Any other factors we should have considered, or any way you would weigh things differently? Please share with us and other Middle Age Miles readers in the Comments!