Welcome bonus math — is the AF worth it?
strategy · 5 min read
The formula
SUB value = (points earned × cents per point for best use) − annual fee − opportunity cost of the minimum spend
Cents per point: use the best-use valuation, not TPG
TPG valuations are "average consumer" redemptions. You should use your best-use number. If you redeem Chase UR at 1.7cpp via Hyatt Category 1-4, use 1.7. If you cash out at 1cpp, use 1.
The opportunity cost
If the minimum spend is $4,000 in 3 months and your normal unchannel card is the Citi Double Cash (2%), you're "losing" $80 of rewards you'd have otherwise earned on that spend. Subtract it.
Worked example
- Chase Sapphire Preferred, 60k UR bonus after $4k in 3 months.
- SUB value: 60,000 × 1.7 cpp = $1,020
- AF: -$95
- Opportunity cost: -$80 (if your baseline is 2% cash back)
- Net: $845 for one application
Most SUBs are worth $500-$1,500 in net value. Below $400 net, it's usually not worth the 5/24 slot.