A couple of weeks ago I wrote a post about the 21 credit cards that I have right now. When people who aren’t miles & points enthusiasts find out how many cards I have they’re often shocked, though I’d like to think my card portfolio is easy to justify, given the benefits I get. Yes, I actually pay a lot in credit card annual fees, but I’d like to think that I get more back in value.
Reader Andrew H left the following comment on that post:
I count a total of $3,187 in annual fees on those 21 cards on a yearly basis. That’s wild. Only 4 of your cards have no annual fee. You travel all the time so most of these make sense but I have to think that you got some of these just for the bonus and will cancel.
It’s an interesting point, so in this post I wanted to do an analysis of my card portfolio, and in particular how I can justify the card annual fees. How much of those annual fees do I allocate to helping me maximize the points I earn for my credit card spend, and how much of those annual fees do I allocate to the long-term perks offered by the cards, which have nothing to do with how much I spend on the cards?
My ~$2,800 in credit card annual fees
First, here’s a chart with the cards that I’ve had for at least 12 months, along with the annual fees, starting with the most expensive:
|The Platinum Card® from American Express||$550|
|Chase Sapphire Reserve®|
|Citi® / AAdvantage® Executive World Elite™ Mastercard®|
|Citi Prestige® Card|
|AAdvantage Aviator Silver Mastercard|
|JetBlue Plus Card|
|Starwood Preferred Guest® Credit Card from American Express|
$0 introductory annual fee for the first year, then $95.
|Starwood Preferred Guest® Business Credit Card from American Express|
$0 introductory annual fee for the first year, then $95
|The Amex EveryDay® Preferred Credit Card from American Express|
|IHG Rewards Club Select Credit Card|
|The Alaska Airlines Visa Signature® Card|
|The World of Hyatt Credit Card|
|Radisson Rewards Premier Signature Visa Card|
|The Blue Business℠ Plus Credit Card from American Express|
No annual fee
|Ink Business Cash℠ Credit Card|
|Chase Freedom Unlimited®|
As you can see, this includes 17 cards, and doesn’t include a few of the cards that I’ve acquired within the past year, which I haven’t necessarily decided what to do with yet.
It goes without saying that this is a lot of money to spend on annual fees. I also realize I travel a lot more than most, and that I’m fortunate to be in a position where I can pay this much in credit card annual fees (even if the numbers check out). In addition to helping me maximize the points I earn for credit card spend, these cards offer all kinds of additional perks, including the following:
- A fourth night free hotel benefit, that saves me thousands of dollars per year
- Annual travel credits — a $300 annual travel credit, a $250 annual airline credit, a $200 annual airline fee credit
- Anniversary free night certificates — two with Starwood, one with IHG, and one with Hyatt
- Other annual credits — a $200 annual Uber credit and $100 annual Saks credit
- Access to Amex Centurion Lounges, Delta SkyClubs, American Admirals Clubs, and Priority Pass lounges
- 40,000 Radisson Rewards points per year
- 5,000 JetBlue points per year
- An Alaska Airlines $121 companion certificate
I’d rather allocate annual fees to perks than bonus categories
When doing this numbers exercise, I’d always rather allocate annual fees to perks rather than the bonus categories offered by cards. Furthermore, my goal isn’t to put an exact dollar value on perks, but rather to look at whether or not they cover the annual fee.
There are a couple of reasons for this. First of all, the reason I don’t provide an exact number value for what I think the perks are worth is because that can vary year-to-year. When I use a hotel free night certificate on a card with a $75 annual fee, I might have redeemed that two years ago for a night that would have cost $400, while I redeem it last year for a night that would have cost $200. For me the key detail in doing the math is to acknowledge that I’m getting more value than what I spent, which is the case in both years. This is an ongoing analysis that needs to check out every year, or else I’ll cancel a card.
I also prefer allocating the fees to perks whenever possible because I find that makes the math easier. That’s because the value of bonus categories is highly relative. In other words, I would value a card differently that earns 5x points in a specific category based on whether the alternative is a card that earns 3x points or a card that earns 1x points.
Annual fees I allocate to perks
As I explain my justification for having a card, I’ll share the amount of the annual fee I allocate to the perks. Then in the next section we’ll look at what cards that leaves, and how I allocate that to the cards’ rewards for spend.
So here we go…
The Platinum Card from American Express has a $550 annual fee, and I’d say I value the $200 annual airline fee credit, $200 annual Uber credit, and $100 Saks credit at a total of about $400. Then I easily get another $150 of value from the lounge access offered by the card, including Centurion Lounge access, Delta SkyClub access, and a Priority Pass membership. So for me that covers the annual fee, and on top of that I get 5x points on airfare purchased directly from airlines, which is the icing on the cake.
The Amex Platinum Card comes with Amex Centurion Lounge access
The Citi Prestige Card has a $450 annual fee, and offers a $250 annual airline credit, so the real out of pocket on the card is $200 per year. I save literally thousands of dollars per year on the card using the fourth night free hotel benefit, though obviously I spend more on hotels than most. So that covers the annual fee.
I’ve saved a lot of money with the Citi Prestige fourth night free benefit
The Chase Sapphire Reserve is a card I have primarily for spend, but it does offer a $300 annual travel credit that’s more or less worth face value, since it can be applied towards any travel coded purchase. Since the card has a $450 annual fee, I view the real cost of having this card as being $150 per year.
The Citi® / AAdvantage Executive World Elite Mastercard® is a card that I have primarily for lounge access but don’t actually spend much money on. The card has a $450 annual fee and offers an Admirals Club membership for the primary cardmember. The icing on the cake is that you can add up to 10 authorized users, and they each get Admirals Club access as well. I find those perks to justify the annual fee.
The Citi AAdvantage Executive Card offers Admirals Club access
The Starwood Preferred Guest Credit Card from American Express and Starwood Preferred Guest Business Credit Card from American Express have $95 annual fees, and starting this August will each offer an anniversary free night certificate valid at a property retailing for up to 35,000 points per night. I value that at more than the annual fee.
The World of Hyatt Credit Card (which has a $95 annual fee) offers an anniversary free night certificate valid at a Category 1-4 property, which I value at more than the annual fee.
Last year I used my certificate at the Park Hyatt Saigon
The IHG Rewards Club Select Credit Card and IHG Rewards Club Premier Credit Card (which have annual fees of $49 and $89, respectively) offer an anniversary free night certificate valid at a property retailing for up to 40,000 points per night. I value that at way more than the annual fee.
Redeem your certificate at the Crowne Plaza Changi Airport
The Radisson Rewards Premier Signature Visa Card offers an annual bonus of 40,000 Radisson Rewards points, which I value at more than the $75 annual fee. I am just building up a balance at this point, but I imagine at some point I’ll find a good use for them.
The Alaska Airlines Visa Signature Card has a $75 annual fee and offers a valuable $121 companion certificate that I’ve consistently gotten value out of. Since I always use this for a ticket that would have cost $200+, I consider that perk to justify the annual fee.
The JetBlue Plus Card has a $99 annual fee, and offers 5,000 point bonus on the account anniversary every year, plus a 10% refund on redemptions, and I think that more or less makes it breakeven with the annual fee. On top of that you can get free bags when flying JetBlue, which is how the value of this card quickly adds up.
Annual fees I allocate to credit card spend
This brings me to the cards that I have for actually maximizing my credit card spend. First to cover the cards mentioned in the previous section, The Platinum Card from American Express is hugely valuable to me, given that it offers 5x points on airfare purchased directly with airlines, though fortunately I don’t even have to account for that benefit with the annual fee due to the other perks.
The Chase Sapphire Reserve offers triple points on dining and travel and allows me to maximize the points I earn on three other Chase no annual fee cards (covered below), so I find that to be worth the $150 annual “out of pocket.”
The AAdvantage Aviator Silver Mastercard is a tricky one. While I don’t really want to spend money on an American Airlines card, spending $50,000 on the card per year earns me 6,000 elite qualifying dollars, 10,000 elite qualifying miles, and a companion certificate. I’m still not sure I should be doing this, but for I used the card last year and this year, and it has a $195 annual fee.
Then the Amex EveryDay Preferred Card offers 3x points on the first $6,000 spent annually at US supermarkets, 2x points at US gas stations, and a 50% points bonus when you make 30 transactions per billing cycle, so in the end I find that to be worth it for the $95 annual fee.
Then there are the following four no annual fee cards that I have to help me maximize spend:
- The Blue Business Plus Credit Card from American Express — 2x Membership Rewards points per dollar on the first $50,000 spent annually
- Ink Business Cash Credit Card — 5x points on the first $25,000 spent annually at office supply stores, and on cellular phone, landline, internet, and cable TV services, and 2x points on the first $25,000 spent annually at gas stations and restaurants; points can be combined with Ultimate Rewards points earned on other cards
- Chase Freedom Card — 5x points in rotating quarterly categories, and these points can be combined with Ultimate Rewards points earned on other cards
- Chase Freedom Unlimited — 1.5x points in non-bonused categories, and these points can be combined with Ultimate Rewards points earned on other cards
And that’s it!
Yes, I pay a lot in annual fees, but I also get a ton of value out of the cards I have. This includes some pretty awesome perks, from free hotel nights to access to all kinds of lounges. For the most part that covers the annual fees on my cards.
The way I view it, the only two cards where I’m really paying directly for maximizing my spend are the Chase Sapphire Reserve and Amex EveryDay Preferred Card, for a total of $245 “out of pocket” per year. I’d like to think I get a disproportionate amount of value from those cards too.
Obviously all of this math is a bit fuzzy, since there are different ways to go about calculating the value you get from cards. Hopefully this is at least an interesting look at how I approach things.