Is it Worth Keeping the Starwood American Express?

This week, a Help Me Travel Cheap reader emailed to ask if he should keep the Starwood Preferred Guest Credit Card® from American Express.  If so, why?

Here are the reasons to keep the card:

  • You get two nights towards hotel status.
  • This is the best, across the board, card for everyday spending and mileage earning.
  • Points earned are flexible in that they can be transferred to other participating airlines.
  • Starwood points tend to be a very valuable currency.

That’s it.

It’s not really an impressive list.  In fact, the only real consideration (in my opinion) is how much you plan to spend on the card.

Remember, the Starwood American Express comes with a $65 annual fee.

While your situation may vary, here are the factors and the math I’d consider.

Since I live in Billings, MT (an expensive US market), carry a Citi American Airlines credit card (so I get a 10% rebate) and will be traveling frequently to Toronto (usually a Citi reduced mileage city). I’m focusing on earning American Airlines miles.

If I did all my spending on the Citi American Express card, I’d earn 1 mile per dollar on non-American Airlines purchases.

However, with the Starwood American Express, I earn 1 point per dollar; but when I transfer a minimum of 20,000 points, I get a bonus 5,000 points.  This means I effectively earn 1.25 miles per dollar.

In the end, that extra 1/4 of a mile per dollar spent (potentially, as long as you’ve got at least 20,000 points) is very hard to justify a $65 annual fee if you plan to keep the Citi American Airlines card and use the Starwood card to earn American Airlines points, as in my case.

I think you’d need to be looking at spending about $20,000 per year on the card in order to justify having it in addition to another mileage earning card.

On the other hand, if a person were going to pay the annual fee on just one card, I think this would be a great card worth considering the annual fee.

Why?

  • The fee is less than most mileage earning cards – $65 per year.
  • The points are transferable, so if a program devalues you’ve still got flexibility.
  • I usually find a way to redeem Starwood points for more than 1 penny per point.
Personally, if I were to keep just one card with an annual fee, it would be the Chase Sapphire Preferred.  Mostly because they have a lot more key transfer partners (i.e. United, British Airways, Southwest, and Hyatt).

At the end of the day, the decision very much depends on your spending habits and the programs you value.

Comments

  1. says

    If you get an additional user (even yourself) and sign up for Amex Small Business Saturday this year then you cn get two $25 credits which offset the fee. Assuming this year is the same as years past.

  2. says

    I guess it all depends on your objective. I carry airline cards, mostly because of the sign up bonus. My favorite is United followed by American. I travel mostly international so the Southwest card really isn’t an option for me.
    I like to compliment my airline card(s) with a hotel card and Sheraton is clearly in the lead in the hostility area. You can transfer points on a 1:1 basis with several airlines, there is a cash and points option that allows stays at a drastically reduced price with low points payment. And then there is the Sheraton standard, you pretty much always know what to expect.

  3. Alexis L says

    There are other benefits to carrying an American Express, such as small business Saturday mentioned by a previous poster and earning cash back by linking your card to American Express promotions via twitter and Facebook. By participating in these promotions, I can always cover the cost of the annual fee.

    • says

      Alexis,
      That’s a good point. I was able to take advantage of small business Saturday and a Walmart Twitter promotion that saved $15. Even just those two events go a long way to offsetting the annual fee.

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