Early this week, I started taking stock of my annual fee cards. Although all my annual fees hit at different times throughout the year, I found myself asking “How many annual fees do I actually have and are these credit card annual fees worth paying?”
What sparked this? The annual fees on both my Citi Prestige and American Express Platinum are due this month and I realized that I have a lot of high annual fee cards. I somehow ended up with three Platinums in the past calendar year, something I need to rectify soon.
Anyway, in my mind there are two ways to evaluate annual fees. You can evaluate the benefits and whether they are worth the fee, or you can evaluate the fee in light of how much benefit you can glean from the card via MS.
For our family, I’ve basically decided that the MS stuff is a wash – I’m never going to MS enough to make any credit card annual fee worth paying. That’s just not my game. If that’s a factor it’s just gravy. It all comes down to whether the annual fees benefit my family. Here are the annual fee cards I have and how I personally decided whether they were worth paying or not in light of our family’s situation.
IHG Card ($49)
Everyone says these IHG credit cards have credit card annual fees worth paying. I’ve only heard one contrarian view (Freequent Flyer) that I can remember, but I’m starting to come around to that view. My wife and I each have this card, so we have two free nights between the two of us.
You’d think this be ideal but between the fact that we travel less than we used to, our unflinching loyalty to Hyatt Diamond (sarcasm, but we did migrate many stays in that direction), and our favoring apartment rentals more, these free nights have become much more difficult to use. I ended up using our 2016 credits for my in laws, which I’m happy to do of course but which is also indicative of how often I have a chance to book these nights.
This card often gets praised for the ability to redeem a room at an Intercontinental for $49, but that’s not really realistic for my situation. Still, I’m enamored with the free night (or the idea of it?) so I’m keeping this card.
Bank of America Alaska Air ($75)
There’s a companion pass, but I’m actually not sure why I haven’t cancelled this card yet.
Barclays AAviator ($89)
I keep telling myself 10,000 anniversary miles a year make the $89 annual fee worth it. I’m not sure why, though. The fee also gets mitigated by free check bags, which we use quite a bit as a family.
Chase Ink Plus ($95)
I earn enough Ultimate Rewards points at office supply stores to justify this annual fee. People often compare cards like the Ink Plus to 2% cashback cards, which is a good rule of thumb. However, I’d never MS that much on a 2% cashback card so I personally don’t use that criteria. Remember, just because it makes logical sense doesn’t mean you need to apply that criteria, especially if it doesn’t apply to your situation.
American Express Delta Gold ($95)
I strongly considered canceling this card last year, but decided that the odds of the family taking two domestic roundtrips on Delta were high enough to keep the card. Checked bags for four segments cost more than $95 so the fee pays for itself. Now I couldn’t guarantee that we’d take that many trips on Delta, so I inherited some risk keeping the card. It worked out this year but I’ll have to reevaluate again for the coming year.
Barclays Jetblue Plus ($99)
Checked bag fees factor in again here, but the big reason why I’m keeping this card is the ability to earn Mosaic status with $50,000 in spend. I fell in love with Mosaic status last year when I status matched, mainly due to the ability to cancel tickets without fees. This comes in super handy for family travel, because when you book 4 tickets being able to change to a lower price without a fee is incredibly clutch. This will be the first time I’m earning status via spend – should be fun!
Citi Prestige ($350 due to Citigold)
I consider my Citi Prestige a $100 fee due to the $250 airline credit I end up getting every year (it’s so easy to redeem). So the question I ask myself is whether I can get $100 back from the fourth night free benefit. This proves harder than you would expect, because we don’t often stay four nights in one hotel (plus the factors I mentioned for the IHG card). Like the Delta Gold, I’m gambling that I’ll use the benefit which will cancel out the annual fee. If saving money was my only priority, this would be easier, but I can’t use the fourth night free benefit as much as others might because hotels don’t always make sense for my family.
Chase Sapphire Reserve ($450)
Like the Citi Prestige, the $300 travel credit on the Chase Sapphire Reserve isn’t difficult to use. So the question I ask myself for this card is whether the card justifies paying $150. Since I’m keeping the Ink, I don’t need the Reserve in order to transfer points to travel partners. So most of the extra value I can get from this lies in the ability to get 1.5 cents per Ultimate Reward point on travel. However, since I already get 1.25 cents per UR through my Ink card, the marginal benefit is only 0.25 cents.
So to make up the $150 I’d need to spend at least 60,000 Ultimate Rewards points towards booking travel. That’d be worth $900 with a Reserve and $750 with just an Ink. I’ll be booking four tickets per trip starting in July so that’s not unrealistic, though put a pin in this for later.
American Express Personal Platinum ($450X2)
Nevermind why I grabbed these cards, the $200 airline credit just doesn’t cut it anymore. I never use Ubers, which AMEX uses to justify it’s upcoming increase of the annual fee to $550. We totally panned these “enhancements” on Episode 50 of the Saverocity Observation Deck podcast so you can hear my full thoughts there, but basically, so long AMEX Personal Platinum cards. Oh, and how could I forget their middle finger towards families!?
American Express Business Platinum ($450)
I’m totally on the fence about this card though I don’t have to decide for awhile. I’m fairly certain I can glean $250 of value out of the 50% points rebate, but I’ll need to do some more thinking about this. That leads me to my final point though.
It’s impossible to evaluate these cards in a vacuum – time to be realistic
You’ve probably noticed a fairly large flaw in my evaluations here. Well, if you’re a parent you probably have. Now for a family with two kids under 5, our family travels quite a bit, despite how messy it can get.
But let’s add up what I need to do to justify all these annual fees (of the cards I’m leaning towards keeping):
- 2 nights in IHG properties
- 2 domestic roundtrips on Delta
- Some Jetblue flights to justify earning Mosaic
- A four night stay with Citi Prestige that saves me at least $100
- At least $900 in flights booked through Chase Travel with the Reserve
- At least $500 worth of travel booked through AMEX Travel with Business Platinum
If I can do all those things, I’ll at least break even on the FIFTEEN HUNDRED DOLLARS of annual fees across those cards. But almost all these benefits are mutually exclusive. I can’t fly Jetblue and Delta at the same time. If I’m booking through Chase Travel, I can’t use my Mosaic status.
To use all these benefits I’m looking at a minimum of three domestic trips realistically. Combine that with our travel goal of one or two international trips (which probably don’t factor into these valuations at all since we try to book those in business class or above), and my travel demand schedule for the year is maxed out at best or exceeded at worst.
Put simply, we probably won’t fly enough to justify all these cards. Especially considering we’ve already completed two of our domestic vacations and booked the international one! So I’m going to be making some cuts in the upcoming months, despite what I said above. My comments above evaluated each card in a vacuum, but I can’t really do that, can I?
My one thing I hope people take away from this post? It’s easy to justify paying the annual fee on almost every single card you can get. But make sure your justifications don’t operate in a vacuum. They need to reflect your actual travel goals and capacity.