Justifying a premium credit or charge card for your traveling pleasure

Update: American Express relaunched the Premier Rewards Gold charge card as the Gold Card, making it a viable contender for your premium card needs. See our writeup here.

Something that comes up on many travel and credit forums is the topic of seemingly-obscene annual fees on certain premium credit cards. Cards like Citi AAdvantage Executive, Chase Sapphire Reserve, and Amex Business Platinum come with a $450 annual fee, and the gold standard (erm, platinum standard) American Express Platinum went to $550 a year last year.

Once upon a time, annual fees were a given in much of the credit card landscape, and rarely came with enough benefits to counter the fees. Today, many of these cards have features that compensate for, or even exceed the value of, the annual fee. In today’s post we’ll take a look at some of the most common benefits (especially with regard to the four cards listed above), and when you might find them worth the fee.

Travel Credits

Several cards provide a travel credit of some sort as part of their benefit portfolio. American Express offers a $200 “fee rebate” on their Platinum and Business Platinum cards, and a $100 rebate on Premier Rewards Gold, which can offset the $550, $450, and $195 fee respectively. These rebates only apply to certain charges, such as checked bag fees, flight change fees, and earlybird check-in for Southwest. The terms and conditions explicitly exclude tickets, upgrades, and gift cards, although some people have been reimbursed for these under certain conditions.

We’ve been reimbursed for Main Cabin Extra fees (and received 5x MR points on top of that) with American Airlines in the past, as well as earlybird check-in on Southwest, so charges like that seem common. There are threads on various travel forums with data on what has worked and hasn’t with regard to other charges (including airline gift cards).

Amex offers an additional travel credit of sorts on the personal Platinum charge card (not Business), in the form of a $200/year Uber credit. You receive $15 per month in credits, with an extra $25 in December, usable for Uber and even Uber Eats. Credits do not roll over, and they are not usable with other ride sharing services.

The Chase Sapphire Reserve card has a much more generous travel credit, in the form of a $300 annual credit that is applied automatically to travel expenses including air travel, taxis and ride shares, hotel charges, etc. We’ve had Las Vegas monorail tickets, hotel stays, as well as Uber and Lyft charges rebated on the date of charge posting, and were able to fully exhaust the credit in about a month.

If you exhaust the travel benefits above, Platinum comes down to effectively $150/year, Business Platinum to $250, Premier Rewards Gold to $95, and Chase Sapphire Reserve to $150. Considering that many midgrade cards have an annual fee of about $100 (including Chase Sapphire Preferred at $95, Barclaycard Arrival Plus at $89), you’re pretty close to even.

Lounge Access

Another benefit of use to frequent travelers is airport lounge access. American Express Platinum charge cards include the Global Lounge Collection, Centurion Lounges, Delta Sky Club (when flying Delta), and Priority Pass. Chase Sapphire Reserve includes the Priority Pass benefit. The Citi AA Executive card includes Admirals Club access, even when not flying on American.

We feel that Centurion Lounges are the best choice where available, but there are only seven in the United States (with the eighth, Dallas Fort Worth, expected to reopen in its new location in October 2018). There are seven other Amex lounges, plus a Centurion Lounge in Hong Kong, outside the US, and three more Centurions are opening next year (LAX, Denver, and New York’s JFK).

American is more generous with their lounges, with 55 Admirals Clubs around the world, often hosting more than one club per airport in places like LAX and DFW. You only need your Citi card and ID when using an Admirals Club lounge.

You can also access Alaska lounges (when flying American, Alaska, or Virgin), Quantas (when flying Qantas or certain American flights out of Auckland and Sydney), and other partner lounges (when flying American).

Priority Pass is included with the Amex and Chase options, but not Citi AA. There are about 1200 lounges worldwide in the Priority Pass Network, and the Chase and Amex memberships allow you and two guests to enter for free. If you’re not near an actual lounge, there are 25 “restaurant lounge” options in the US, where your allowed contingent gets a $28 credit per person ($30 at PF Chang’s in LAX) toward food and drink in a partner restaurant in lieu of a lounge stay. There are also lounge restaurants outside the US, and your Priority Pass app or the website will tell you what’s available per airport.

Conservatively, we estimate a $25 value for a lounge visit if you have a meal and a cocktail. Some may be more (a five hour wait at a Centurion club could result in $100 worth of cocktails alone, for example), and some lounges may not have that much value (cheese cubes and soda only go so far), but three round trips for two can bring you a $150 value or more, which brings Business Platinum to $100 and wipes out the other cards’ fees. Traveling with family or colleagues/friends can double or triple that value (or more).

Hotel and Auto Status

American Express Platinum offers Hilton Honors Gold, Starwood Preferred Guest Gold Elite (which may change as they update for the Marriott/Starwood loyalty merger), as well as Avis, Hertz, and National auto rental programs. Business Platinum offers similar benefits.

The value of these will depend on where you stay and what privileges you take advantage of, but in addition to welcome amenities, free upgrades, breakfasts, water bottles, and bonus points/points multipliers, they can really add up if one of these programs is your preferred program.This is especially true if you’re not staying enough to earn the status organically, but often enough to enjoy the occasional benefits.

Chase Sapphire Reserve offers National, Avis, and Silvercard benefits, but no hotel status benefits. AA Executive does not offer any status benefits with hotels or car rentals.

Additionally, American Express offers the Fine Hotels and Resorts program, which we’ve written about before (Delano, Aria), as well as the Hotel Collection, for premium hotel experiences. Chase has the Luxury Hotel & Resort Collection, which is analogous to the FHR program. FHR and LHR offer upgrades, breakfasts, early check-in, late check-out, occasional free days at certain properties and other benefits which can easily be worth $60 or more per day of your stay.

Additional noteworthy benefits

All four cards mentioned offer a fee credit for Global Entry and/or TSA PreCheck, which is worth $85-100 every five years. If you have more than one card, you can use the fee credit for a friend or family member; authorized users may get their own credit as well. We recommend getting Global Entry if you think you might leave the country and come back within 5 years, but even with PreCheck, that’s $17/year in value.

Amex Platinum offers Boingo wifi access, while Business Platinum provides ten Gogo inflight internet passes in addition to the Boingo wifi network. Both cards also provide ShopRunner access, which provides free 2-day shipping at many online retailers.

The personal card offers a $50 Saks Fifth Avenue statement credit every six months. The business card offers a 35% points rebate when you pay-with-points for air tickets through Amex Travel.

Chase provides additional redemption value when booking travel through the Chase Ultimate Rewards portal. When compared to Chase Sapphire Preferred, 10,000 points would be worth $150 with the Reserve card, versus $125 with the Preferred card (if you choose to redeem for cash/statement credits, the value is $100 either way).

Both Amex and Chase cards offer bonus points on certain travel expenses (Chase with 3x points on travel and dining; Amex with 5x points on certain air and prepaid hotel charges). These values may vary depending on whether you redeem through the card issuer’s portal or transfer points to a partner, so you would have to decide what the points bonuses are worth to you.

There are also extended warranty and purchase protection benefits as well as concierge services with the Amex and Chase offerings.

You may have noticed we haven’t talked much about the AA Executive card in this section. Its benefits are meager beyond lounge access, to be honest; you get a 25% rebate on inflight food and beverage purchases, double AA miles on American Airlines purchases, and 10,000 AA Elite Qualifying Miles if you spend $40k in a year.

Citi Price Rewind is available on this card, which gives you 60 days to match to a lower price on an item you purchase with the card, and get the difference credited back to your card. We’ve used this benefit before, but it’s also available on the Citi Double Cash card, with 2% cash back and no annual fee, so it’s not really a motivator toward the AA Executive card.

So what card do I want?

The easy one to call on is the Citi AA Executive Mastercard. If you are often in airports with Admirals Club lounges, the Admirals Club membership benefit is a pretty good value. Without Executive Platinum status, the membership would be $550 the first year and $500/year on renewal, so you’re getting that benefit for $50-100 off even without the other meager AA Executive benefits. We consider this card worthwhile for the lounges alone, but we travel several times a year and use the lounges at least once a month on average.

The other three cards (Amex Platinum personal and business charge cards, and Chase Sapphire Reserve credit card) can easily make up their annual fees if you only travel a couple of times a year. Having more than one may be a harder deal to compensate for, but a well timed luxury hotel stay could bring you $500 or more in value on any of the cards.

The cash value breakdowns are as such:

  • Amex Platinum (Personal): $550 fee. $200 fee rebate, $200 Uber credits, $100 Saks credit, $17-20 amortized TSA Pre/Global Entry value. Remaining effective fee: $30-33.
  • Amex Platinum (Business): $450 fee. $200 fee rebate, $17-20 amortized TSA Pre/Global Entry value. Remaining effective fee: $230-233.
  • Chase Sapphire Reserve: $450 fee. $300 travel credit, $17-20 amortized TSA Pre/Global Entry value. Remaining effective fee: $130-133.
  • Citi AA Executive: $450 fee. $400-550 lounge membership. Remaining effective fee: $0 (sorta).

If you take lounge access into account on the non-AA cards, or any of the other benefits mentioned above, you should be able to bring the effective fee to zero or better. And while the Business Platinum card has less cash-type benefits, you can probably deduct its annual fee on your taxes (consult your tax professional to be sure) if you are using it for an actual business.

Have you taken the plunge with one of these premium cards, and if so, was it worth it to you? Let us know in the comments.

Disclaimer: We don’t put referral links to credit cards in our posts, and we don’t get any consideration from credit card issuers for our coverage. They don’t review, promote, or (probably) even know about  this blog. For some of the cards discussed, we can provide individuals with a personal referral link if you’re interested.

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