How I've Saved Over $1,000 on Premium Credit Card Annual Fees
October 10, 2016
One of the questions or concerns that I hear most when it comes to credit cards pertains to a card's annual fee. Even though I already have written a post on why you should consider a premium card, I wanted to give you a couple more real-life examples to show why it's not as scary as you may think.
Generally, the best credit cards come at the highest cost. These "premium" cards come with a higher annual fee, but more perks. However, even if you still don't think the perks make it worth it (which is understandable), I want to make sure that you understand the true cost of the card and how you can maximize the card's value.
Most premium cards offer travel credits, where you can get a refund when you spend money on certain travel categories. For some cards like the Chase Ritz Carlton Rewards card and the Amex Platinum card these credits cover "incidentals" like baggage fees, upgrade fees, change fees, etc... Usually you have to indicate an airline that you want to use this credit for and you will be automatically reimbursed. The Platinum Card comes with a $200 credit and the Ritz card comes with a $300 credit.
However, the Chase Sapphire Reserve and the Citi Prestige card offer straight, automatic travel credits. No need to indicate an airline or call customer service. The Reserve has a $300 credit for all travel. The Prestige offers a $250 airfare credit.
These cards offer this benefit based on calendar year, so before you pay your next annual fee you can get double the value.
This is the method I utilize when I have a card that doesn't offer a straight airfare or travel credit since I don't check bags.
If you have a card that you need to designate an airline this works fine. You can buy gift cards on that airline and you will get a statement credit shortly after.
So far I have bought $300 worth of gift cards with my Gold Card and my Platinum card, which has put my out of pocket cost for both cards at a combined $150 instead of the normal $645. Remember, the Gold Card has a $195 annual fee that is waived the first year, which means I actually made $100 by holding the card!
The Final Word
I have stressed this before and will say it several times in the future... Do not get scared off by an annual fee. As you can see there are so many ways to work down the fee that your cost is significantly lower than face value.
All total, I have saved $1,150 off my annual fees using these strategies! That's over 50% off for my collection of cards!
In this case, the old cliche is true - You gotta spend money to make money!