While some people think paying an annual fee on a credit card is always a bad idea, there are plenty of others who don’t mind at all. After all, many credit cards with annual fees come with perks like travel insurance, extended warranties, and purchase protection. If you’re able to use these benefits to your advantage, you can easily come out ahead.
Read more: The best no-annual-fee credit cards
Then again, there’s a big difference between paying a hundred bucks or less and an annual fee of $450 or more. Some of the top rewards credit cards push the limits in this respect, asking for an annual contribution of $450 or even $550 just to be a cardholder.
Should you pay that much for a credit card? It really depends, but even if you do, you might need to stick to just one.
Keep in mind that we’re focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.
When you’re working to earn credit card rewards, it’s important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.
The case for credit cards with high annual fees
If you’re wondering why in the world anyone would pay $450 or more to carry a credit card, you won’t have to look very hard. Cards like the Chase Sapphire Reserve, Platinum Card from American Express, and even the Hilton Honors Aspire Card from American Express do come with hefty fees, but they also offer exceptional benefits.
For example, the Chase Sapphire Reserve comes with an annual travel credit of $300, a Priority Pass Select airport lounge membership, and up to a $100 Global Entry or TSA PreCheck credit. You also earn 3 points per dollar on dining and travel, and your points are worth 50% more when you book travel with points in the Chase Ultimate Rewards portal.
The Platinum Card from American Express offers a more diverse set of benefits in exchange for its $550 annual fee. Not only do you get up to $200 in airline fee credit each year, but you also get up to $200 in Uber credits per year. You also get a Global Entry or TSA PreCheck credit of up to $100 and access to a broad selection of airport lounges worldwide. The icing on the cake? You earn 5x points on flights booked directly with the airline or with AmexTravel.com and prepaid hotels through AmexTravel.com.
The Hilton Aspire is a hotel credit card that comes with a $450 annual fee, but it’s still insanely popular. Why? Because this card gives you automatic Hilton Diamond status (the hotel’s highest status level), airport lounge access, up to $250 in airline fee credit each year, up to $250 in resort fee credit each year, and a free weekend night every year. Oh, and you’ll earn 14 points per dollar spent at Hilton properties — a huge perk if you stay in Hilton hotels often.
The bottom line: Cardholders who utilize these benefits can get a ton of value in return — much more than they pay in annual fees. Whether you’ll get that kind of value depends on the card you sign up for, how often you travel, and how much you’ll ultimately earn in rewards.
The problem? Overlapping benefits
Still, when it comes to rewards credit cards with high annual fees, you can wind up overpaying for benefits you can’t use. One detail you’ll notice when you compare top-tier travel credit cards is that many of them come with the same benefits. Specifically, the majority of the most expensive travel credit cards give you airport lounge access, a credit for Global Entry or TSA Precheck, and some sort of airline fee credit.
Since airport lounge membership is specific to the cardholder, doubling up on this benefit won’t do a lot of good. The same can be said for Global Entry or TSA PreCheck credits. You can use them for family members, but you’ll eventually run out of people who need this perk.
This is why, many times, it makes sense to use one credit card with a high annual fee at one time. That way, you won’t pay for benefits you won’t be able to utilize.
Which $450 credit card should you choose?
Since the right credit card for each individual depends on their spending style and goals, there’s no “right” answer for everyone. However, I tend to believe that the best rewards card available today with a high annual fee is the Chase Sapphire Reserve.
There are many reasons why I feel this way, including:
• The $300 annual travel credit the Chase Sapphire Reserve offers applies to any travel expense, whereas American Express travel credits only apply to specific airline purchases like in-flight Wi-Fi and checked baggage. Worse, you have to pick an airline at the beginning of the year with Amex, and your credit will only apply to purchases you make with them.
• In my opinion, the Chase Ultimate Rewards program has the best airline and hotel transfer partners of any other credit card program. Some of my favorites include Southwest Airlines, Air France/Flying Blue, United MileagePlus, and World of Hyatt.
• You get 50% more travel when you use points to book airfare, hotels, and more through the Chase Ultimate Rewards portal. This portal partners with Expedia.com as well, so there are hundreds of thousands of travel options available to book.
Read more: Amex Platinum vs. Chase Sapphire Reserve
It’s up to you to decide which high-dollar rewards credit card might leave you better off, but you should take the time to compare cards and perks before you commit. Paying $450 or more for a travel credit card may make sense for your situation, but paying thousands in fees each year may not pay off at all.
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