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NerdWallet's Smart Money Podcast
Here’s What Tariffs Could Cost You (Plus: Downgrade or Ditch Your Premium Card?)
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- [00:00]
Sean Pyles
Today's episode is sponsored by Quince.
- [00:02]
Elizabeth Ayola
You know that moment when summer winds down and your closet suddenly feels like a mashup of beach leftovers and wishful thinking?
- [00:09]
Sean Pyles
Yep, that's when you realize it's time for a reset minus the luxury price tag. Quince what I love about quints is the huge variety of products that they offer. I picked up their organic Turkish waffle robe and now I'm living my white lotus fantasy every time I step out of the shower. And Elizabeth, you know that I'm in the middle of planning my honeymoon to Japan. So I also got their Napa leather RFID passport holder and luggage tag set. So now I'm ready to travel in style.
- [00:36]
Elizabeth Ayola
Sounds very stylish to me, Sean. And you're going to have to send me pics of all of the items.
- [00:40]
Sean Pyles
Oh, you know it.
- [00:41]
Elizabeth Ayola
So I personally have been lounging on their cotton velvet pillow covers. When I saw that they were 100% cotton velvet and they were machine washable, I was sold. I also got the pillows in my favorite color, which is yellow or marigold technically. And I just love how soft the pillow covers are and it seems to be great quality for the price.
- [01:00]
Sean Pyles
That's because Quint works directly with top artisans and skips the middleman markup.
- [01:04]
Elizabeth Ayola
Plus they only partner with factories using safe ethical practices and premium fabric so you can feel good about what you're wearing and where it came from.
- [01:12]
Sean Pyles
I use this stuff and you should too. Elevate your fall wardrobe and home essentials with quince. Go to quint.com smartmoney for free shipping on your order and 365 day returns.
- [01:24]
Elizabeth Ayola
That's Q-U-I-N-C-E.com smartmoney to get free shipping and 365 day returns. Quince.com smartmoney this episode is brought to you by Lifelock.
- [01:39]
Rick Vanderknife
When you visit the doctor, you probably.
- [01:41]
Sean Pyles
Hand over your insurance, your ID and contact details. It's just one of the many places that has your personal info and if any of them accidentally expose it, you could be at risk for identity theft.
- [01:51]
Rick Vanderknife
Lifelock monitors millions of data points a second.
- [01:54]
Sean Pyles
If you become a victim, they'll fix it, guaranteed or your money back. Save up to 40% your first year@lifelock.com podcast terms apply. The federal government does a lot of economic data dumps. Seems like every day there's a new important statistic that comes out about how our economy is doing. But last week was a humdinger of data dumps and a lot of it has an impact on your personal economy. So today we'll walk you through some of it. Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles.
- [02:34]
Elizabeth Ayola
And I'm Elizabeth Ayola. Later this episode, we'll be looking at credit card fees and which ones are worth spending money for perks. But first, our weekly Money news roundup where we break down the latest in the world of finance to help you be smarter with your money.
- [02:48]
Sean Pyles
Our news colleague Anna Helhosky is here with fellow news nerd Rick Vanderknife to walk us through some of the big economic statistics that came out recently. And we're going to hear a bit more about tariffs, too, right, Ana?
- [02:59]
Ana Helhosky
Yeah, that's right. And Rick and I have been digging deep into all the huge stats that came out last week. Rick, what would you call last week a monster week for economic data or.
- [03:08]
Rick Vanderknife
We were pretty stressed it was a monster week in the middle of a monster year generally for economic news. And, yeah, it kind of hit a crescendo last week. I worry that it's not going to slow down anytime soon.
- [03:20]
Ana Helhosky
What we're going to try and do here today is make it all a little bit more digestible for people, starting with kind of the big headline last week. And right now it's tariffs. And in case you missed it or you're not a regular listener, we're in the midst of a trade war and last week it escalated. Now, just a disclaimer we are recording on Wednesday. So if there have been any changes that we haven't mentioned, that's why we haven't. This morning, for instance, President Trump announced an additional 25% tariff on India as a punishment for purchasing Russian oil. And that's bringing India's tariff rate to a whopping 50%. Now, Rick, there's already a bunch of tariffs that were in place way prior to today.
- [04:00]
Rick Vanderknife
A ton. Yeah, yeah. 50% tariff on steel and aluminum and steel related products, 25% tariff on automobiles and car parts, 17% tariff on tomatoes from Mexico. So it kind of runs the gamut. And some of the latest ones, 50% on copper and 40% on countries that are trying to dodge US tariffs by routing through other countries first.
- [04:23]
Ana Helhosky
So as of today, there are a slew of country by country tariffs, and these are delayed versions of what Trump called his Liberation Day reciprocal tariffs. There is now a 15% baseline tariff on most imports and up to 50% on specific nations. The only country other than India with a 50% tariff rate is Brazil. And that was imposed in response to what Trump calls a threat to the US national security. Now, several countries were able to secure deals, right, Rick?
- [04:52]
Rick Vanderknife
Yeah, 15% with the EU, South Korea and Japan. And originally 25% for India was announced as a deal. But obviously that's, that's been scotched with today's news. Some of these deals include agreements for nations to invest in the US and that's a little bit fuzzy about how these will work. And there's a lot of talk about future penalties over Russian oil purchases, India being the first example.
- [05:15]
Ana Helhosky
But consumers are going to, if not now, eventually feel the effects from it. So tariffs are paid by importers and they usually pass the added costs on to customers or they have to absorb it. Now, price increases will impact all consumers, but they tend to hit low income households the hardest. Yale Budget Lab also projects that tariffs are likely to affect things like clothing and textiles, driving up commodity prices for leather products like shoes and handbags, apparel and other textiles. And retailers have been stocking up goods ahead of the tariff deadlines and that could delay some of those pricing impacts. But it's unclear exactly when consumers will start really seeing those higher prices.
- [05:57]
Rick Vanderknife
And some companies and industries are sort of absorbing the cost for now. Autos are a big example. The 25% tariffs have been effect for months. Prices have not gone up dramatically. Kelley Blue Book recently said they went up 1.2% in June. That's partly because cars, there were a lot of inventory that was pre tariff, but also because manufacturers are eating the costs for now. General Motors and Volkswagen both reported big losses in the last three months. And you know, that's for competitive reasons. Nobody wants to be the first to raise their prices. But the Yale Budget Lab says that car prices could raise more than 12% over the next couple of years.
- [06:38]
Elizabeth Ayola
Right.
- [06:38]
Ana Helhosky
Eventually they'll stop just absorbing those costs and likely pass them on to the consumer. So there's quite a few tariffs that are going to be happening next. So after this big slew is over, Trump has moved to shut down the de minimis exemption worldwide. And that's a long standing loophole that excludes businesses from paying tariffs on really low value packages that are shipped to the US So think lots of things from like Shein or Amazon, cheap stuff, but then they have to be paying the tariffs on them now. So that's been around since 1938 and it was originally intended to like ease trade inefficiencies. And then it was later expanded, and Trump had ended the exemption for Chinese businesses in May. So this new expanded order won't go into effect until the end of the month. But there are also some other tariffs under consideration. Lumber, pharmaceuticals, rare earth minerals, aircraft and related components and trucks. And I think in a couple of weeks, the US Is going to be releasing the results of its probe into semiconductor and chip imports. And that's, that's going to be a big one. There's a lot of other sources of tension and uncertainty in the economy other than tariffs. Rick, the July jobs report just came out and it caused quite a stir. Can you talk us through a little bit what happened there?
- [07:51]
Rick Vanderknife
Absolutely. Yeah. Unemployment ticked up just a hair to 4.2%, but job growth was far below expectations, 73,000 jobs in July. And then the bigger news was the revisions to the earlier months. So if you want to talk us through that.
- [08:06]
Ana Helhosky
So there was a significant revision for May and June job growth, and it led to a combined drop of 258,000 jobs. Revisions aren't that weird, even though it kind of sounds like pretty dramatic. But I do want to get ahead and explain why the bls, that's Bureau of Labor Statistics, releases preliminary jobs data. They're based on surveys that are collected middle of the month, so you're not really getting a complete picture. And jobs data, like a lot of other data, is revised multiple times as accuracy improves. Why am I explaining all this? Well, following the release of the report, Trump fired Erica McIntarver, the head of the Bureau of Labor Statistics, who was appointed by former President Biden. Rick, can you explain a little bit about what Trump's reasoning was for that?
- [08:53]
Rick Vanderknife
Well, he was taken by surprise by the job numbers. It kind of punctures his, his narrative around how the economy is booming. Now. He reached all the way back to the election last year to accuse the head of BLS of manipulating numbers. He thinks the numbers were manipulated to make him look bad and make the economy look worse than it actually is for political reasons. BLS chief was a Biden appointee. And that was reason enough, apparently, right.
- [09:27]
Ana Helhosky
After there was a lot of backlash. And Trump's own former BLS commissioner, Bill beach said that, quote, there's no way the BLS head to alter numbers. And he was talking about that as commissioner, he never saw the data until it was finalized. And then the only thing that he was touching was some wording in the report. There are some serious problems with the president firing someone over an economic report that they don't like it's going to erode public trust and not only jobs data, but trust in other government stats that going to be talking about like gdp, like inflation. It's threatening the independence of agencies that are compiling economic stats. Let's turn now to talk about some other economic data that we've seen. Rick, can you talk a little bit about GDP right now? What do we see in the most recent report?
- [10:13]
Rick Vanderknife
The most recent report showed the second quarter GDP kind of rebounded from the first quarter. We actually had negative growth. It shrank by 0.5% in the first quarter.
- [10:24]
Ana Helhosky
Right.
- [10:24]
Rick Vanderknife
That's never a good sign. But it was kind of a technical dip. There was a surge of imports ahead of the Trump tariffs as businesses kind of stocked up on inventory. In the second quarter, we saw some of that rebound. Imports went back down as that stock finally ended and some of the tariffs kicked in and consumer spending rose, possibly because consumers were trying to buy things before tariffs really kicked in and inflation.
- [10:49]
Ana Helhosky
So there's some potentially anomalous behavior. There's some weird technicalities that just all around doesn't make the economic picture too clear. The next quarter we're kind of hoping will be a better indication of where the economy is at as the tariffs are taking full effect and we'll see a response from consumers and businesses. Now, something else that consumers are pretty concerned about right now are prices. So, Rick, take us through the inflation report that came out last week.
- [11:14]
Rick Vanderknife
Yeah. Last week we had a report from the Personal Consumption Expenditures Price Index, which we will just call the PCE from here on out. It shows that inflation is beginning to edge up. The core PCE had dropped down to about 2.5% by April and now it's at 2.8% in the most recent month. That's well above the Fed's 2 point percent target. That's what the Fed is watching as it makes rate decisions. On a monthly basis, it rose 0.3%, which is again, it's ahead of most of the tariffs landing. So it's kind of a worry sign for the economy. The Fed's under a ton of pressure from Trump to cut rates, but it's still not seeing what it wants to see in terms of the inflation numbers.
- [11:57]
Ana Helhosky
Right. And there is a lot of pressure right now on Federal Reserve Chair Jerome Powell to cut rates and certainly primarily coming from President Trump. But the president can't fire a Fed chair. That still hasn't stopped him from intensifying. Again, kind of leaning on the Fed, which is an independent entity. And the Fed is Looking to all the economic data that we've been talking about, gdp, inflation, jobs, to guide its decision, the Fed met last week and made its decision for the month of July, and they chose to not cut rates. The dominant speculation right now is that the Fed could cut rates at its September meeting. But even though it doesn't feel like we're a long way from there, we kind of are a long way from there because of all the reports that are going to be coming out. It's also really unclear if we're going to see tariffs having a bigger impact on the economy and that being reflected in the data. So something else the Fed tracks and we're thinking about is how people are feeling about the economy. It looks like it's a pretty mixed bag out there.
- [12:52]
Rick Vanderknife
Pretty mixed bag, yeah. Two of the most widely reported consumer sentiment reports came out last week, one from the University of Michigan and the other from the Conference Board. Both measure basically how Americans feel about the economy. Are they optimistic? Are they concerned? How are they feeling in the longer term about their job prospects, about prices? And it's not hard data. Right? It's measuring how people feel. It kind of feeds back into how people feel because when they hear other people are not feeling great about the economy, that might affect their own feelings.
- [13:22]
Ana Helhosky
Right.
- [13:23]
Rick Vanderknife
And consumer sentiment really dove back in spring when a lot of the tariffs were first being announced and people were hearing a lot of news about coming inflation, that inflation hasn't really materialized yet. And so some of those numbers have been bouncing back a bit. Do you want to walk us through that?
- [13:41]
Ana Helhosky
Last week's two major surveys came out. One's from the University of Michigan and the other from the Conference Board. And. And they were again, a little bit mixed bag. They reported that consumers are feeling slightly better about current conditions, but there's still a lot of worry about what's ahead, especially when it comes to jobs, income and as we mentioned, many, many times now, the impact of tariffs. The overall picture there is people aren't panicking, but they're not terribly confident either. We've covered a lot of ground today. What does this picture mean for people? As our resident economist Elizabeth Renter said last week, consumers may be feeling uneasy about the economy and all of that uncertainty, particularly around tariffs. Reigniting inflation could lead people to front load purchases. We've already seen that come up in the data, but that could continue even more. So, combined with high interest rates, it's possible that debt could become unmanageable for households. On Wednesday, the New York Fed reported that credit card debt, for example, had hit $1.21 trillion, and that's in line with last year's all time high. Now, if the economy can stay resilient, consumers might be able to stay afloat. But if true hardship starts kicking in, it's going to be more of a challenge to manage debt. So that's certainly something to be mindful of.
- [14:54]
Elizabeth Ayola
Yeah, with fewer jobs, trade wars and inflation ticking up, I can't stop thinking about the importance of having an emergency fund because you never know what's going to happen next.
- [15:04]
Sean Pyles
Well, Rick and Ana, thank you for breaking this all down for us.
- [15:07]
Ana Helhosky
Yeah, thanks for having us up next.
- [15:08]
Sean Pyles
We answer a listener's question about whether it's worth paying high fees for credit cards that have reward programs and other perks. But before we get into that, we're running our annual listener survey. And yes, there are prizes. We're giving away the first ever Smart Money branded merch. It's super exclusive. Only seven people will get it. Not even Elizabeth and I have this merch. One winner will get a pair of Sony ULT wireless noise canceling headphones. Six others will get the Bagu Cloud Carry on bag, which is actually super nice. I have one myself. The survey takes just a few minutes to complete and we read every single response. This is your chance to help shape what Smart money covers, how we cover it, and how the show evolves. Head to smart money.com podsurvey and fill it out by September 15th to be entered for a chance to win and.
- [15:54]
Elizabeth Ayola
A reminder to send us your money questions. If you are worried about how to navigate your finances with what's going on in the economy, you need help with your budget or you're thinking about buying a new car. Leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901730, nerd. You can also pop us an email@podcasterdwallet.com.
- [16:16]
Sean Pyles
And a special shout out to anyone who lives in Scottsdale, Arizona. The Smart Money team is going to be there in early September and we're looking for a listener or two to talk with in person. So if that's your jam, send an email to podcastnerdwallet.com with the subject Scottsdale and a money question that you would like to talk with us about. Alright, in a moment. This episode's money question. Stay with us. Today's episode is sponsored by Rula.
- [16:42]
Elizabeth Ayola
Telehealth has made mental health care more convenient than ever but let's be honest, getting support can still feel more stressful than tax season.
- [16:50]
Sean Pyles
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- [17:08]
Elizabeth Ayola
Yeah, I started therapy about wow almost six years ago now and I know how much impact that it's made in my life. I feel so much more emotionally regulated and I have the tools I need to get through life's challenges. I've seen how therapy can change lives, mine, friends and family. And the hardest part of therapy is often just finding someone you click with. Rula takes the stress out of that.
- [17:29]
Sean Pyles
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- [17:37]
Elizabeth Ayola
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- [17:42]
Sean Pyles
Thousands have already trusted Rula to support them on their journey toward improved mental health and overall well being. Head to rula.com smart money to get started today. After you sign up they'll ask you where you heard about them. Please support Smart Money and tell them our show sent you.
- [17:57]
Elizabeth Ayola
Go to r u l a.com smart money and take the first step towards better mental health today because you deserve quality care from someone who cares. We're back and we're answering your money questions to help you make smarter financial decisions. This episode's question comes from a listener via email. Hello nerds. I am writing to see what you folks think about my Chase Sapphire reserve card I have had since December 2016. I am really annoyed with the changes Chase is making with the fee increase and all other travel being cut from three to one points. That impacts a lot of my travel spending because a lot of things can't be booked through Chase's portal in parentheses trains in Europe, etc. I don't want to close the card because it's tied as my second oldest line of credit 8.5 years versus 13 years for my oldest card. So my question is what would you folks advise on downgrading the CSR to the Sapphire Preferred or the Freedom Unlimited? To add context, I get 3.5% on travel from bank of America's premium travel rewards card so that would beat the Sapphire Preferred's three points. My second question on this is what would my credit score get lower to if I swapped my premium card from the CSR and opened an Amex Platinum line of credit. My score has been in the 805 to 820 range lately. Thanks, J Rod.
- [19:28]
Sean Pyles
All right, J Rod, those are some fabulously nerdy credit card questions. And to help us answer them, we have credit card nerd Melissa Lambarena. Hey Melissa, welcome back to Smart Money.
- [19:37]
Melissa Lambarena
Hi everyone.
- [19:37]
Elizabeth Ayola
Thank you for having me on this episode. We're going to talk about some credit card companies that are nerd wallet partners, but that doesn't influence how we discuss them. The benefits, terms and fees mentioned were accurate at the time of posting, but things can change. Some offers may have expired by the time you're listening, but for the latest details you can follow the links in the episode description. Let's start broadly for anyone who's new to credit card rewards. What are they and why do some consumers go bananas for them?
- [20:05]
Melissa Lambarena
Credit card rewards are different incentives that issuers can offer in the form of points, miles, or cash back. And they can be very valuable, especially if you're a big spender. This could add up to hundreds of dollars, maybe more annually that can allow you to stretch your budget or even fund your next vacation.
- [20:26]
Sean Pyles
So a big caveat that I'll add is that as sweet as some of these perks are, they really aren't worth it if you are unable to pay off your credit card balance. Credit card interest rates can be super high and so the amount that you'll pay in interest is pretty much guaranteed to quickly wipe out any value you would get from these rewards. So please tread very carefully and don't go into debt just to get a sign up bonus or to get extra points for your trip to Japan.
- [20:50]
Elizabeth Ayola
How did you know I was trying to go to Japan?
- [20:52]
Sean Pyles
Sean, I'm speaking for myself here. I'm planning my honeymoon in Japan right now. Okay, well, let's dig into the listener's question about the Chase Sapphire Reserve. More specifically, Chase recently announced an increase to this card's annual fee. The new annual fee is $795, up from $550. That is very steep. This change went into effect for new applicants on June 23, 2025, and for existing cardholders. They would be getting the new benefits and features starting October 26, 2025, and would be on the hook for the higher fee the next time they renew their card. So Melissa, what are some of the other changes that will impact credit card holders and how do they change the calculus about whether these cards are still worth the Annual fee.
- [21:35]
Melissa Lambarena
It's that annual fee that is a big change for cardholders and it may no longer align with some budgets out there. The card packs a lengthy list of perks that you can use potentially to make it up, but you'll have to put in more effort to track these benefits and use them well.
- [21:51]
Elizabeth Ayola
Melissa, the listener is annoyed and so am I about a specific change. Many travel purchases are being cut from three to one points. I'm a Chase Sapphire reserve cardholder and that's a major deal breaker for me, especially considering many of the new perks that would justify the price hike aren't appealing to me. Can you talk us through how this change from 3 to 1 points impacts cardholders?
- [22:14]
Melissa Lambarena
Yes. This change gives Sapphire cardholders fewer rewards to book travel outside of Chase's portal. So if someone wants to explore the best deals out there, look for last minute promotions or discounts and earn a solid rewards rate on travel, then this card might no longer be as appealing to them.
- [22:34]
Sean Pyles
And Chase is also changing how points are valued when redeemed for travel booked through Chase's portal. So Melissa, talk us through how the change to how Chase's valuing points redeemed in their portal is really going to work.
- [22:45]
Melissa Lambarena
In practice, this is a drastic change for cardholders. Previously they could earn 1.5 cents per point on Chase Travel. Their new program called Points Boost will allow them to redeem points now for 2 cents a piece towards select flights or hotel stays. Now this sounds more valuable if those flights or hotels will fit your travel preferences and they qualify for Points Boost, but if they don't, they will be worth $0.01 each. So your points will be worth $0.01 apiece and that's significantly lower than what the card previously offered.
- [23:25]
Sean Pyles
All of this is just underscoring for me why Chase's credit card point system is just too fussy to mess with. I know some people love redeeming their points and gaming the system and booking through the portal, but to me that is just a few too many hoops to jump through when it comes to getting the value of a credit card point. I don't know, that's just me personally.
- [23:45]
Elizabeth Ayola
No, I agree. And I'm just under a year of having the card and this sounds very stressful. I don't need any more stress. So on that note, some customers, like the Listener and myself are conflicted about how closing the account could impact their credit score. I know closing a card can affect your credit utilization ratio and also the age of your credit, which are both important factors for your score. So can you expand on both?
- [24:09]
Melissa Lambarena
Definitely. Your credit utilization ratio is the amount of credit that you're using compared to the credit you have available. Experts typically recommend not using more than 30% of your available credit. This is just to sum up what that means for people who might not know. And when you close your credit card, that amount of available credit shrinks. And this is what in turn can negatively impact your credit scores. Your age of credit is also a factor that impacts your credit score. It tells lenders how long you've been an active user of credit and also gives them an idea of your track record over time. So when you close a credit card, it can reduce the average age of your remaining accounts when it's eventually removed from your credit report.
- [24:54]
Sean Pyles
Our listener, J. Rod here, asked about how much their score might be lowered. And it's really hard to pinpoint or predict exactly how much a score might be lower because there are so many factors that go into one person's credit score. But I think folks can play with credit score simulators to see how a potential closing of a card might affect their credit report. But it seems like their score is in a pretty healthy range anyway, so they might not to worry about it too much, really.
- [25:20]
Melissa Lambarena
Exactly.
- [25:21]
Elizabeth Ayola
Now, Melissa, I flirted with the idea of downgrading my card like the listener. So what are the implications of downgrading the Chase Sapphire Reserve? And also what happens if they get an Amex Platinum right after? The only thing that should impact their credit score for the latter is opening a new line of credit, right?
- [25:38]
Melissa Lambarena
That's correct. Downgrading a credit card doesn't impact your credit score because you're not opening a new line of credit. You're keeping the same account and the number. And that's typically the appeal of being able to downgrade. You're just changing the card's terms. Now, opening the Amex Platinum can temporarily cause your credit score to drop. And this is common with most credit card applications. So whenever you're applying for a new credit card, you can expect that.
- [26:05]
Sean Pyles
And let's talk about the process of downgrading a credit card or getting a product transfer, as it's sometimes called. Is this as simple as just calling your credit card issuer? Can this be done online? What's their best bet here?
- [26:17]
Melissa Lambarena
Typically, you have to call the credit card issuer, and I've done this myself before. It's fairly easy. But you do need to set aside some time to chat with customer service or possibly other representatives. And you can call them and just ask them if you can downgrade your credit card to a different option. Every issuer is different, so they might only allow you to downgrade to a select amount of cards in their portfolio or all of their cards in their portfolio if they allow you to downgrade at all. But it's worth asking if it brings you closer to your goals.
- [26:50]
Sean Pyles
So what are the top things that folks should consider when they are trying to choose between keeping downgrading or canceling a card?
- [26:57]
Melissa Lambarena
Well, like our listener did, it's important to consider whether they want to preserve their good credit. If they have any applications that are coming up, they're going to be applying for credit anytime in the near future. They also want to consider the cost of maintaining the credit card they have and whether it still aligns with their spending and lifestyle. And they can make use of the card's incentives and perks to make up the annual cost if there is one another thing to consider how much you would save by downgrading, if that is an option for you. Next, the value of rewards with one option compared to the other. And also what happens to those rewards if you were to close the account or downgrade because you might need to end up using them or risk losing them before you make any sort of change of that sort. And then lastly, consider any details unique to you, like our listener did. For instance, they are considering their options between the Freedom Unlimited and the Sapphire Preferred, and the decision will ultimately hinge on whether they can make up that annual cost of the Sapphire Preferred. But also the tiebreakers will be where they do most of their spending. For instance, are they spending more on groceries and streaming, or are they spending more in the category of drugstores? And these are things I want to consider because their bank of America card already rewards some of the similar categories, so that's ultimately going to help narrow down the tiebreakers.
- [28:30]
Sean Pyles
And Melissa, I want to hear your thoughts as well around how someone can make that $795 annual fee on the Chase Sapphire Reserve worth it. As in, how can they use all of the points or options that they can get from this card to really justify that cost? So what is your approach to getting the most out of a card with an annual fee and ensuring that you can maybe hopefully come out ahead of that big price tag?
- [28:54]
Melissa Lambarena
You want to be aware of everything that the card offers and if there are any dates to keep in mind or any sort of restrictions. For instance, the Sapphire Reserve issues half of a credit during part of the year and then the other half the next part of the year. So these are things you want to keep in mind. And organization is key when you're dealing with the card that has a lot of nuts and bolts because you want to make sure that you're able to make the most out of every single perk that the card offers to justify that fee. But it's important to note that if you don't already spend in these categories or on these services and the card is leading you to overspend just to make up the cost of that annual fee. In other words, you're spending on things that wouldn't align with your budget or that aren't in your budget, then it's really not worth it.
- [29:45]
Sean Pyles
Yeah, I think that's where I land. It's really not worth it because of all the time and effort and organization that would go into justifying the fee for a credit card. I mean, I like my credit card points, don't get me wrong, but simply not worth it for me. I'd rather spend my time and mental energy elsewhere.
- [30:00]
Elizabeth Ayola
I wish I could justify the fee because I do like the card, but I am not interested in a Peloton membership, an Apple tv, an Apple Music subscription and all the rest of the things on that list. So I'm going to have to agree with you.
- [30:12]
Sean Pyles
Sean, what else can you do with nearly $800? Elizabeth, I'm guessing your son would love some toys for that amount of money.
- [30:19]
Elizabeth Ayola
No, not another toy for me to step on. But we are trying to go to London in September and one of the tick is about $700.
- [30:27]
Sean Pyles
So there you go.
- [30:29]
Melissa Lambarena
That's great. And that is definitely how you should be thinking about credit card annual fees and London. That sounds very exciting.
- [30:36]
Elizabeth Ayola
Yes, it's home for us, so it'll be visiting friends and family, but it's been a while.
- [30:40]
Sean Pyles
Melissa, can you share if you have any cards with annual fees and how you justify them yourself?
- [30:47]
Melissa Lambarena
Yes. So like you, I am also someone that needs a card that is very simple. I'm not into keeping track of all the different card perks and different incentives, especially if they come with limitations. So I like to choose a simple card that aligns with my spending habits. And it's simple enough that I can keep a mental note to know when I have to use up a credit like an annual credit or where I might have to do any spending that's already within my budget to make sure that I'm able to make the most of it.
- [31:19]
Sean Pyles
Thank you for all of your tips and advice around managing this newly very expensive annual fee. You are very welcome and that's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the Nerds and call or text us your questions at 901-730-6373. That's 901730, nerd. You can also email us at podcastnerdwallet.com join us next time to hear about financial advisor fee structures. Follow Smart Money on your favorite podcast app, including Spotify, Apple Podcasts and iHeartRadio to automatically download new episodes and a reminder that we want to help you with your budget. If you want us nerds to poke around your finances and give you some tips and strategies, head over to the episode description and click the link to fill out the Google form.
- [32:01]
Elizabeth Ayola
And here's our brief disclaimer. We are not your financial or investment advisors. This nerdy information is provided for general educational and entertainment purposes and it might not apply to your specific circumstances. This episode is produced by Tess Figland and Anna Helski. Hilary Georgie helped with editing. Nick Karismi mixed our audio and a big, big, big thank you to NerdWallet's editors for all their help.
- [32:25]
Sean Pyles
And with that said, until next time, turn to the Nerds.
- [32:34]
Elizabeth Ayola
Okay, before we let you go, Sean and I want to give another reminder about our giveaway. You could be one of seven winners of some really nice Smart money merch. One person's going to get a pair of Sony ULT wireless noise canceling headphones and six winners will get the Bagoo Cloud Carry on bag, which I heard Sean has and it's really nice. All you have to do is fill out our listener survey, which only takes a few minutes. You'll not only be helping us make the Smart Money podcast even better, but you'll also be entered for a chance to win those awesome prizes. Just go to nerdwallet.com podsurvey and complete the survey form by September 15th for a chance to win. You can read the official rules for more details, which again can be found@nerdwallet.com PodSurvey thank you and good luck.