Are all of my credit card annual fees worth paying? I take a look at some of the annual fees I have and whether the benefits outweigh the annual cost.
Credit Cards Family Travel Miles and Points Thoughts

Credit card annual fees worth paying

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.

Are all of my credit card annual fees worth paying? I take a look at some of the annual fees I have and whether the benefits outweigh the annual cost.

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. 

Are all of my credit card annual fees worth paying? I take a look at some of the annual fees I have and whether the benefits outweigh the annual cost.

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?

Final Thoughts

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.

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Are all of my credit card annual fees worth paying? I take a look at some of the annual fees I have and whether the benefits outweigh the annual cost.

Joe
Just an average joe trying to fly his family for less
http://www.asthejoeflies@gmail.com

17 thoughts on “Credit card annual fees worth paying”

  1. I would keep three of the cards mentioned despite not being to maximize.

    I would have to agree with the IHG card not being a good card for when you travel with families and friends. A lot of times the free rooms don’t come with two beds so not good for families and non-sexual friends. Most of the time I end up redeeming those on Holiday Inns/Express that have award rooms with two beds available instead of a higher-end IC w/ only a king or queen bed.

    Bank of America Alaska Airlines. I just got this card and redeemed the companion pass. Since I live in Hawaii, the companion paid $99 plus taxes. The total came out to about $160! $60 of taxes on a $99 companion fare! I’ve always had a problem with Alaska being more expensive than competition from my airport to destinations on the mainland and wanted to test out how the companion pass measures up. Alaska is more expensive but when you have the companion pass, I actually end up saving $300/$400 for the flight I booked. Still pissed on the taxes and fees tho.

    Amex Business Platinum – haven’t signed up but I will not since fee is not going up and the 50% points back on redemption.

  2. Why do you keep AS card. Try to make a random booking on AS web site and at the time of payment you will be offered AS card with $100 credit after $1000 in purchases in 3 months. That will take care of your first year fee and just cancel before the second annual fee is due and apply for a new one.

    By the way an excellent review from a very unique perspective. A very different thought process challenging the herd mentality.

    1. Lol oh I’m not keeping that. Just haven’t canceled it yet (it’s been like three months). I got the sign up that came with the credit so the first year annual fee was indeed covered!

  3. Hi Joe,

    I enjoyed reading this post, as I do whenever I visit your blog. But I think you are paying way too many fees.

    “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.”

    $1500? Yikes! And it sounds like you won’t be able to break even. You might as well ditch most of the cards, pay for the baggage fees if and when you fly card-less, and you’ll still be ahead!

    As for my own approach to AFs, my attitude in the first year is very different from how I see it in subsequent years. Generally I’ll get a card for a lot of points and so mind a high fee less, as with like CSRes 100K offer. Or I’ll get a card knowing the first year’s AF is waived. But once the first year goes by, I really have to have a very good reason to keep a card, especially if the fee is $100+.

    My situation – almost retired, grown kids, international and domestic destinations but not that many trips a year, a fair amount of flexibility on when can I travel, few if any paid flights, lengthy hotel stays when I do travel – is almost diametrically opposed to yours. Although I like hotel points much more than annual free nights, we get lots of value from our household’s 2 IHG cards. Lots of folks hate Club Carlson, especially since they eliminated the free 2nd award night, but we’ve still found good value at foreign Rad Blu properties and the status the card brings almost always gets us upgrades. Getting 50% more with Chase UR bookings, the $300 travel credit, the versatility of URs, and 3x for dining out spend makes the CSRes a great card for us too. We almost never check bags, so I wouldn’t keep a card for the free checked bags, and even though I live on the west coast, AS companion tickets are helpful only on paid flights and I am never sure if I’ll have one on AS. It remains to be seen if we’ll keep the Flexperks cards we got during the Olympics promo. The fee is low but we haven’t put any spend on them since the promo ended. My MSing days are for the most part behind me, so no need to keep the Flexperks for that.

    So, while I’m still trying to wrap my frugal head around that $1500 pricetag 😉 you definitely nail it in your final paragraph: “…justifications…need to reflect your actual travel goals and capacity.” How right you are.

    Happy Daylight Saving Time! While you’ll lose an hour, maybe you can use the extra daylight to cancel a few of those cards 😉 !

    1. Haha, don’t worry, I’m canceling! Each card “justification” was in a vacuum, but there’s no way I am paying $1500 (hence the all caps). But all the annual fees are hitting in the fall so I’ll have some time to decide 🙂

  4. Thanks for an excellent write up of your approach, justifications and some ‘productive’ self-doubts. It confirmed some of my own strategy moving forward and also gave me a nudge to reexamine some conclusions (mostly to keep cards / keep paying AFs) I arrived at. Happy Sunday!

  5. You should contemplate changing the Ink Plus to an Ink Cash (no AF) and then keeping the CSR. That way you keep 5X (though half the capacity obviously), keep the ability to transfer, keep the 1.5cpp and the rest of the CSR perks.

    1. That’s a good look. I got an Ink for my wife last year but don’t use it, was just gonna cancel it but if I downgrade that one too I keep the same capacity I’m used to… thanks!

    2. Thumbs up to this. I would definitely recommend this over cancelling CSR and keeping Ink Plus, especially if you have more than one Ink available and aren’t maxing it out.

  6. I would factor in how much I save with Amex Offers for the Amex cards. I usually get at least $100, if not more, in credits back on each Amex card on things I would be buying anyway.

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