Why Premium Credit Cards With High Annual Fees Are Worth It for Casual Travelers
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INSIDER SECRET: A number of the best credit cards for travel are premium cards. And in many cases, the annual fee is more than offset by the card benefits.
If you’re a casual traveler, who takes only a few trips per year, you may be turned off by the high annual fee that many premium rewards cards charge. Without a doubt, there are some premium rewards cards that have sky-high annual fees, like The Platinum Card® from American Express at $550 (see rates & fees) or the Chase Sapphire Reserve at $550. It’s certainly a lot of money out of pocket, especially all at once.
But most premium rewards cards come with a ton of extra benefits that can far outweigh the annual fee. I’ll show you why premium cards are often worth the annual fee and how to figure out if they’re worth it for you.
Premium Card Benefits
Most premium cards are worth the high annual fee because of the benefits that help offset the annual fee and they allow you to earn points at a much faster rate than other cards.
For example, The Platinum Card® from American Express has a steep annual fee of $550, but it comes with many added benefits:
- Up to $200 in statement credits per calendar year for airline incidentals with your selected airline (luggage fees, inflight food and drink, etc.)
- Up to $200 in Uber credit per year
- Up to $100 in Saks Fifth Avenue statement credits per year
- Up to $100 statement credit for Global Entry or TSA PreCheck
- Airport lounge access to Priority Pass, Centurion and AirSpace Lounges
So if you can use all of these credits, the annual fee is more than justified. Plus, you get to take advantage of free lounge access and all the high-earning rates that come with the Amex Platinum, such as:
- 5x points per $1 spent on airfare booked directly with airlines or through Amex Travel
- 5x points per $1 on prepaid hotels booked through Amex Travel
Another great example is the Chase Sapphire Reserve. At $550, the annual fee isn’t cheap, but the card comes with these great benefits:
- $300 annual credit every card member anniversary for travel purchases such as airfare and hotels
- $100 statement credit for Global Entry or TSA PreCheck
- Free Priority Pass Select membership for access to airport lounges
With the credits, the annual fee is effectively reduced to $150, plus you get the Sapphire Reserve’s awesome earning potential;
- 3x points per $1 spent on travel (not counting the $300 offset by the statement credit)
- 3x points per $1 spent on dining
In addition to the Amex Platinum and Chase Sapphire Reserve, there are a number of other premium cards that have high annual fees but a ton of benefits:
- The Business Platinum Card® from American Express
- Hilton Honors Aspire Card from American Express
- U.S. Bank Altitude™ Reserve Visa Infinite® Card
- Citi Prestige
Is It Worth It for You?
All of the perks and benefits of premium cards can be enticing, but you should decide whether the benefits are worth it to you.
For example, the $100 Saks Fifth Avenue credit on the Amex Platinum might be great for some people but is worthless if you never shop at Saks. It’s best to review the benefits of each card and determine if you will actually use them (or better yet, if they are benefits related to spending you were already planning).
I pay $189 each month for a train pass, so I can easily take full advantage of the $300 travel credit from the Chase Sapphire Reserve. Since the $300 travel credit applies to spending I would be doing otherwise, the $550 annual fee is effectively reduced to $250. To me, this fee is well worth it given the 3x points on travel and dining and the lounge access.
To figure out if the annual fee is worth it for you, simply start with the card’s annual fee and then subtract the value of any credit or benefits that you will actually use. Then determine if the amount left is worth it for you to have the earning rates and benefits that come with the card.
There are plenty of premium travel credit cards that come with high annual fees. But in most cases, the increased earning rates combined with the credits, perks and benefits of the card makes it worth the higher price. In some cases, the annual fee is more than paid for by the card benefits.
To figure out what is best for your situation, review the benefits that you will use and then subtract them from the annual fee. In many cases, you’ll find that it’s worth it to pay the higher annual fee.For rates and fees of The Platinum Card® from American Express, please click here. For the latest tips and tricks on traveling big without spending a fortune, please subscribe to the Million Mile Secrets daily email newsletter.
Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)