Are High Annual Fee Credit Cards Worth It?

Are High Annual Fee Credit Cards Worth It?

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There are credit cards out there at all kinds of price points — there are some fantastic no annual fee cards, there are some rewarding mid-range cards (with annual fees of under $100), and then there are premium cards (with annual fees of $300+).

For many consumers, premium credit cards can be the hardest to justify, since many people just don’t think it’s worth spending hundreds of dollars per year on a single credit card. That’s fair enough, but I also think it’s worth discussing how we’ve seen a fundamental shift in the value of premium credit cards.

Going back a decade, premium credit cards had a pretty niche value proposition, and many people got these cards primarily for the prestige. However, the premium credit card space has become much more competitive in recent years, and this has caused the value proposition on these cards to improve considerably.

While premium credit cards aren’t for everyone, nowadays I’d say they’re pretty easy to justify for many people who like to travel. Yes, you’ll pay a high fee upfront, but the perks typically more than justify that. In this post I wanted to look at that in more detail.

Why premium credit cards are worth having

Let’s take a closer look at some of the most popular premium cards on the market. We’ll take a look at the annual fee, and then how I go about justifying the ongoing cost of holding onto these cards. I won’t even discuss the welcome offers, which can get you a ton of value upfront, and are all the more reasons to consider these cards.

Capital One Venture X Credit Card

The Capital One Venture X Rewards Credit Card (review) has a $395 annual fee, and is the newest premium personal credit card on the market. I also think it has the easiest to justify annual fee.

How do I justify the annual fee? The card offers a $300 annual travel credit (good as cash through the Capital One Travel portal) plus 10,000 anniversary bonus miles (I value Capital One miles at 1.7 cents each, so that’s $170 worth of value right there). By my math, you’re getting $470 worth of value on a $395 annual fee card with those two benefits alone.

But that’s only the tip of the iceberg:

As you can see, it’s really easy to make the math on the Capital One Venture X work, even if you’re not someone who would usually consider a premium credit card.

Access Priority Pass lounges with the Capital One Venture X

Chase Sapphire Reserve Card

The Chase Sapphire Reserve® Card (review) has a $550 annual fee, and is probably the most popular premium card with the younger generation.

On the most basic level, the card offers a $300 annual travel credit, which is automatically applied to any travel purchase. That should be good as cash to anyone who has this card, meaning this card should really only be costing you $250 per year.

What do you get for that $250 investment?

Independently I wouldn’t say the Chase Sapphire Reserve is quite as easy to justify as the Capital One Venture X, but the major benefit of this card is all the other cards you can maximize in the Ultimate Rewards ecosystem by having the Sapphire Reserve.

Use your annual credit toward virtually any travel purchase

Amex Platinum Card

The Platinum Card® from American Express (review) has a $695 annual fee (Rates & Fees), so it’s the highest annual fee personal card of the bunch. Arguably the card set the standard for premium cards, though nowadays its value proposition can be pretty polarizing.

The card’s annual fee can potentially be more than justified by the incredible number of credits offered, including the following (enrollment required):

  • Up to $300 in annual Equinox credits
  • Up to $300 in SoulCycle credits
  • Up to $240 in annual digital entertainment credits
  • Up to $200 in annual hotel credits
  • Up to $200 in annual airline fee credits
  • Up to $200 in annual Uber credits
  • Up to $189 in annual CLEAR credits
  • Up to $155 in annual Walmart+ credits
  • Up to $100 in annual Saks credits

As you can see, that’s potentially $1,800+ worth of annual credits. What’s the catch? These credits aren’t nearly as straightforward as the ones on Capital One and Chase cards. These credits are largely broken down by month, and come with lots of restrictions on what they can be redeemed for.

Some cardmembers will roughly breakeven on the annual fee with how they actually use these credits. Others may come out way ahead. Before you get the Amex Platinum Card, definitely do research on the terms associated with the credits, and how much value you’d get from them.

This is only one aspect of the card, though. The Amex Platinum Card also offers the most comprehensive airport lounge access of any credit card. You get a Priority Pass membership, access to Delta Sky Clubs (when flying Delta same day), Amex Centurion Lounge access, and much more.

Access Delta Sky Clubs with the Amex Platinum

Citi AAdvantage Executive Mastercard

The Citi® / AAdvantage® Executive World Elite Mastercard® (review) has a $450 annual fee. While it’s not as well-rounded as the other premium cards, I think it’s worth covering, as it offers one of my favorite credit card perks.

Most significantly, the card offers an American Admirals Club membership for the primary cardmember. That already represents a discount, as a membership would otherwise cost you a minimum of $550 per year if purchased directly from American.

But it gets much better than that. You can add up to 10 authorized users to the card at no extra cost, and they each receive Admirals Club access as well. Each authorized user is able to bring up to two guests or their immediate family into Admirals Clubs.

This means that your $450 annual fee card is really getting Admirals Club access for up to 11 people (along with their guests), which almost seems too good to be true. Again, it’s not for everyone, but if you’re an American Airlines frequent flyer, it’s a no-brainer.

Access Admirals Clubs with the Citi AAdvantage Executive Card

Bottom line

There are credit cards at just about all price points. While many people have no issue picking up a no annual fee or sub-$100 annual fee card, premium credit cards with high annual fees are a different story.

I’m not saying everyone should pick up a credit card with a $300+ annual fee, though I do think the cards are easier to justify than most would assume. That’s especially true with a card like the Capital One Venture X, which offers annual credits and perks that more than justify the annual fee.

Cards like the Chase Sapphire Reserve aren’t slam dunks in quite the same way, but make a lot of sense for those who want to earn travel rewards, value lounge access, and appreciate travel protection when things go wrong.

The Amex Platinum Card has the potential to be the most rewarding of the bunch, despite the high annual fee. However, maximizing it requires a lot more research and effort than with the other cards.

What’s your take on the value proposition of premium credit cards? Which do you find to be worthwhile?

The following links will direct you to the rates and fees for mentioned American Express Cards. These include: The Platinum Card® from American Express (Rates & Fees).

Conversations (15)
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  1. iamhere Guest

    The general ideas is correct - if you get more value from the card than the annual fee it is worth it. It is easy to use enough benefits to get a return on the card.

    Many people do not value the 50% bonus on the Reserve card. I have had a great return on that this year at redeeming it for restaurants and importantly this can be done for restaurants worldwide. I will...

    The general ideas is correct - if you get more value from the card than the annual fee it is worth it. It is easy to use enough benefits to get a return on the card.

    Many people do not value the 50% bonus on the Reserve card. I have had a great return on that this year at redeeming it for restaurants and importantly this can be done for restaurants worldwide. I will usually transfer Amex points when needed because using their travel center with points costs a lot more points for the same plan than Reserve.

    This said your post is biased only toward the cards that paid you to feature them on this article. You include a few points cards and one airline card. There are other airline or hotel premium cards that may be worth it if you frequent their hotels and get a good price points to redeem depending on the property, etc.

  2. FTF Guest

    Dumped AmEx Platinum when the fee went up. The perks were not that attractive, and I had found I could barely justify the lower fee. Too many restrictions, too much fine print and "high end " perks that simply did not add up. The monthly restrictions and the limited ability to make full use of many of the perks made it far more trouble than it was worth. I downgraded to the AmEx Gold card, but find keeping up with all the "offers" is a fruitless effort.

    1. Randy Gold

      I am planning to do as well. Just to use to get $200 in 500-mile certs for AA for companion upgrades, but AA elminated the certs.

      I have top status on AA and UA - so I don't need the airline credits. Get Clear from UA with 1K LT.

      Problem is - I frequently get denied entry into the Centurion Lounge as it is always too crowded. Or you have to wait and...

      I am planning to do as well. Just to use to get $200 in 500-mile certs for AA for companion upgrades, but AA elminated the certs.

      I have top status on AA and UA - so I don't need the airline credits. Get Clear from UA with 1K LT.

      Problem is - I frequently get denied entry into the Centurion Lounge as it is always too crowded. Or you have to wait and be called. Better to just go to AA or UA clubs (membership in each).

      I have plenty of $50 bath towels from Saks. And no longer user Uber - they are twice as much as taxis in my area.

    2. Randy Gold

      Plus - next year you will need to pay $50 to bring a guest into the Centurion lounge - so that is a no starter as well.

  3. Andrew Diamond

    I'm commenting mainly because every other "Andrew" or "Andy" as weighed in.

    Amex Plat - cannot wait to drop this. ROI on the card is negative for me (literally clear and streaming is all I can use), yet I took a retention offer so I can't bail until 1/2023. Hopefully something positive changes before then, otherwise I'm out before my renewal date in 2023.

    1. Skyward Geek Member

      I am still getting value out of it - also took a retention offer. It's also my oldest card (this was originally a $0 fee card Amex Blue or whatever I took out 25 years ago!), so either I downgrade or keep.

      I still get 100% value out of the following credits. It's marginal but I'm not out any money.

      Up to $240 in annual digital entertainment credits
      Up to $200 in annual hotel...

      I am still getting value out of it - also took a retention offer. It's also my oldest card (this was originally a $0 fee card Amex Blue or whatever I took out 25 years ago!), so either I downgrade or keep.

      I still get 100% value out of the following credits. It's marginal but I'm not out any money.

      Up to $240 in annual digital entertainment credits
      Up to $200 in annual hotel credits
      Up to $200 in annual airline fee credits
      Up to $200 in annual Uber credits
      Up to $100 in annual Saks credits

  4. AC Guest

    In addition to the benefits you listed, I would add the following 2 for the Amex Platinum:

    - Amex offers (can get on other Amex cards but my experience is my Platinum card has the most valuable ones and I have 5 Amex cards)
    - International Airline Program where I once saved $2400 on 3 Delta One seats to Venice by purchasing through Amex Travel versus what the Delta website charged for the exact...

    In addition to the benefits you listed, I would add the following 2 for the Amex Platinum:

    - Amex offers (can get on other Amex cards but my experience is my Platinum card has the most valuable ones and I have 5 Amex cards)
    - International Airline Program where I once saved $2400 on 3 Delta One seats to Venice by purchasing through Amex Travel versus what the Delta website charged for the exact same flight. Anyone that travels internationally on their own dime and isn't using points should, IMHO, always check the International Airline Program site for pricing. One trip can often cover the entire year's AF.

  5. Andrew Guest

    Yes, the answer is yes. It might not make sense to keep all of them, but for the sign on bonus and benefits they are worth it. You could even alternate each year if you wanted to keep getting sign on bonuses. Play the game as long as they allow it.

  6. Reno Joe Guest

    Ben, this begs your opportunity cost question. What is the *incremental* value of the candidate card over the card you would otherwise use? What is the net cost (annual fee minus statement credits) of the candidate card if the candidate card will be in addition to the other card? Or, *incremental* cost if the candidate card will replace the other card?

  7. Bort Guest

    I'd also say that you need to not look at the fee and perks of a premium card in a vacuum. Compare both the fee and perks to the no fee and lower fee versions of that card, then decide if the delta between them makes sense based on your spending habits.

  8. Andy Diamond

    My advice/experience is to read the fine print, which may take the decision either way. And the fine print may be different in different countries.

    Last year, when international traveling restarted, I considered the Amex Platinum Card in Switzerland (where I live). At the first glimpse it looked attractive because it includes Allianz Assistance, arguably the most reputable travel insurance in Europe. About the same time Allianz they will include coverage against Covid (e.g. hotel...

    My advice/experience is to read the fine print, which may take the decision either way. And the fine print may be different in different countries.

    Last year, when international traveling restarted, I considered the Amex Platinum Card in Switzerland (where I live). At the first glimpse it looked attractive because it includes Allianz Assistance, arguably the most reputable travel insurance in Europe. About the same time Allianz they will include coverage against Covid (e.g. hotel or flight cost when you test positive and can’t return as planned). This sounded like a deal, you get the Amex Platinum and also this really useful travel insurance. BUT: No, Allianz explicitly excludes (!) Covid in the T&C for Amex clients …

    Bottom line: I decided to stick to my free (cash back) credit card and purchase Allianz Travel Assistance - but directly from Allianz. This is not only more economical, but offers the extended insurance protection.

  9. Tristan Guest

    Obligatory "why didn't you mention the Hilton Aspire?" comment, hah.

    1. DLPTATL Gold

      or the Delta Reserve card (which if you're a Delta loyalist is superior to the AmEx Platinum unless you can jump through enough hoops to utilize all of the monthly credits)

  10. LEo Diamond

    Anyone can comment on The Platinum Card® from AMEX Singapore? https://www.americanexpress.com/sg/charge-cards/platinum-card/?linknav=sg-amex-cardshop-allcards-text-PlatinumCard-fc&cpid=100482257&sourcecode=A0000FPW94
    1,712 SGD annual fee seems insane!

    1. Ethan Guest

      Well it's Singapore, overpriced and under-delivered seem to be their signature.

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Tristan Guest

Obligatory "why didn't you mention the Hilton Aspire?" comment, hah.

2
iamhere Guest

The general ideas is correct - if you get more value from the card than the annual fee it is worth it. It is easy to use enough benefits to get a return on the card. Many people do not value the 50% bonus on the Reserve card. I have had a great return on that this year at redeeming it for restaurants and importantly this can be done for restaurants worldwide. I will usually transfer Amex points when needed because using their travel center with points costs a lot more points for the same plan than Reserve. This said your post is biased only toward the cards that paid you to feature them on this article. You include a few points cards and one airline card. There are other airline or hotel premium cards that may be worth it if you frequent their hotels and get a good price points to redeem depending on the property, etc.

1
Randy Gold

Plus - next year you will need to pay $50 to bring a guest into the Centurion lounge - so that is a no starter as well.

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