You Spend How Much on Annual Fees?!
There’s a misconception that travel hackers travel 100% for free. Sure, credit card points and miles open up possibilities that would never be possible if they were paid for completely out-of-pocket. But much of the “free” travel that we earn is more like “very cheap” travel. We pay annual fees on multiple credit cards. This allows us to subsidize trips that would otherwise be super expensive, like our recent trip to NYC over Thanksgiving break.
Here are the cards along with their annual fees that I keep open indefinitely.
|Issuer||Description||Annual Fee ($)|
|US Bank||Club Carlson Platinum Rewards||50|
|American Exress||Hilton Honors Surpass||75|
|American Exress||Starwood Preferred Guest||95|
|Barclays||Advantage Aviator Red World Elite (aka American Airlines)||95|
|Chase||IHG Rewards Club Select (x2)||98|
|Chase||Marriott Rewards Premier Business||99|
Before you freak out over how much we’re blowing on credit card fees, take a look at why each card is worth keeping (for us) and why we pay the annual fee every year.
US Bank Club Carlson Platinum Rewards
This is the second cheapest card I hold in my portfolio. I rarely use this card but I like to keep it open because it’s the only US Bank card I have (ever, I think). It’s an easy way to establish a history with this issuer. If US Bank releases an awesome new card, I’ll be ready for approval. Every year I renew that card and pay the $50 annual fee I get 25,000 Club Carlson points. They aren’t worth much but it’s not too difficult finding a lower category hotel to redeem those points at. Keeping this card open also helps me to diversify with different types of hotel points in case a Hilton, for example, is not available in some obscure location we’re visiting ;).
Chase Southwest Plus
I signed up for the Chase Southwest Plus card to earn the famous Southwest Companion Pass. I also had the Chase Southwest Premier card but have since cancelled that one because it had an annual fee of $99 as opposed to the $69 the Plus card carries. Again, I don’t use this card on a daily basis but I keep it open because I earn a decent referral bonus when my friends use my link to sign up for the card. (Typically 5,000 Southwest Rapid Rewards points per referral but sometimes it’s 10,000!). This card also comes with a yearly 3,000 bonus points after I pay the annual fee. I calculated that if I refer at least one friend per year to this card it makes sense to pay the annual fee. Everything after that is just a bonus.
Amex Hilton Honors Surpass
This card has a few great perks for an annual fee of $75. The greatest benefit is that it automatically boosts me to Hilton gold status as long as the card is open. I’d otherwise have to stay 20 times or have 40 nights in a given year to earn gold status. My favorite benefit of gold status is free breakfast! With enough Hilton stays per year, $75 is a great price to pay for free breakfast for two. It’s really easy to accumulate Hilton points with the Surpass card because it earns 12 points per dollar spent on Hilton properties and 6 points per dollar at grocery stores, restaurants and gas stations. Not bad! In January 2018, this card will be re-branded and the annual fee will increase to $95. There will be a few added perks for the increased annual fee such as free lounge certificates and the elimination of foreign transaction fees so I may or may not keep this one going forward, we’ll see…
American Express SPG points are hands down the most valuable of the transferable points. The greatest aspect of these points is that they can be transfered to basically every airline and when the points are transferred in 20,000 increments, 5,000 bonus airline points are added. So 20,000 SPG = 25,000 American Airlines miles. The SPG card is a great way to earn valuable airline miles like Alaska Mileage Plan miles or Singapore Airlines KrisFlyer miles. I earn referral points for this card as well so it helps to justify keeping this one open. It’s also worth mentioning that SPG points are pretty hard to earn so it definitely boosts earning potential by carrying the Amex SPG and paying the annual fee on a yearly basis. “Amex Offers” (discounts at various merchants) which are included with the SPG card also keep the net cost of this card down.
Barclays Aviator Red (AA)
I try to cancel this card every year but Barclays keeps waiving my annual fee! $95 is a bit much for a card that doesn’t offer any bonus categories outside of American Airlines spend. This card does reimburse 10% of redeemed points up to a total of 100,000 redeemed points per year. If I was to max this out I’d receive 10,000 AA points back every year. This would be decent if I actually redeemed 100,000 AA points every year. I don’t. So this card will go bye-bye if they don’t waive my annual fee again. Another perk to note on this one is that it offers free checked bags for the card member and up to four companions. This benefit could make paying the annual fee for some people worthwhile if they travel with people who check bags. No checked bags for us so this card will be out in the future.
I love this card so much I pay for two of them. Katie has one in her name and I have my own. At $49, it’s one of my favorite cards. I never use it and keep it in my dresser to earn a free night at any IHG property worldwide every year. In the past we’ve used this card to stay at the Intercontinental Paris – Le Grand, the Venetian in Las Vegas, and this year we’ll redeem the certificates at the Intercontinental Hong Kong that regularly goes for over $300 per night. I’ll pay $49 to stay at an Intercontinental any day. Heck, I’d pay $49 to stay at a Howard Johnson! (Ok, maybe not but you get the point.)
Chase Marriott Rewards Premier Business
Like the Chase IHG, this card offers a free night certificate every year the annual fee is paid. However, the Marriott card is double the price and the free night is restricted to Category 1 through 5 properties. In theory, the certificate is easy to use but this year I had trouble finding a convenient property to use the certificate at. I hate this restriction and unsurprisingly, not many Category 5 properties in the U.S. exist so this one will most likely be cancelled going forward.
Another hotel card. Chase charges $75 for this one and it also includes a yearly free night certificate. Similar to the Marriott card, the free night is restricted. The certificate can be redeemed for a free night at up to category 4 Hyatt properties. I’ve had this card open for several years and find that it isn’t too difficult to find a good value with this annual certificate. Basically every Hyatt hotel charges more than $75 a night so the free night certificate isn’t a bad deal and I find it’s worth paying this card’s annual fee.
Chase Sapphire Reserve
I saved the best for last. You’d be hard pressed to find someone who hasn’t at least heard of this card. Last year they offered a signup bonus of 100,000 points which are worth at a minimum $1,500 so I jumped on it. It’s a premium card with all sorts of random benefits like primarily rental car insurance, free roadside assistance, trip cancellation/interruption insurance etc… but the card is not cheap… Like $450 not cheap. Yes that’s right, four hundred and fifty U.S. dollars. I can write an entire post on the reasons to keep this card open and pay the annual fee every year (and maybe I will) but there are two specific benefits that really make the decision easy for us. The first is that Chase reimburses $300 in travel expenses every year. This effectively brings the cost of this card down to $150 which is just slightly more than other cards that offer nowhere near the perks of the CSR. The second benefit is the included Priority Pass lounge access. There are over 1,000 airport lounges worldwide in this network and we can visit them for free thanks to our Sapphire Reserve card. Lounge access has saved us so much money on expensive airport food costs and has made our travel so much more comfortable. We travel enough that lounge access alone makes the annual fee worth paying.
Wow, that’s a lot! I have other cards currently open but I plan on canceling them once their annual fees are due. I don’t like spending money that I don’t have to spend so I do an analysis on every card to make sure I’m getting enough value to justify the annual fee. Our travel isn’t completely free but it’s pretty dang close to it. I hope I made it clear that it’s okay to pay credit card annual fees as long as they are offset by yearly retention benefits.
How about you? Do you pay credit card annual fees? If so, which ones? Let me know if you need help determining whether it’s worth paying a card’s annual fee.