Travel Credit Cards With Benefits that May Justify an Annual Fee Beyond the First Year

Every year we’re all forced to think deeply.

To cancel or not to cancel.  That is the question.  Whether tis more cost effective to cancel or to keep a credit card account open.

Some plastic is clearly only worth the sign up bonus, but other travel credit cards with benefits may in fact be worth paying the annual fee.

In addition to getting the benefits, I think it’s worth mentioning that if you can keep the card for longer than a year, the issuing credit card company will be more likely to keep issuing you cards.  Thus, I think there is a ‘good customer’ benefit any time you can renew the annual fee.

Travel Credit Card Benefits that Make an Annual Fee Reasonable

Free Baggage

With most airlines charging $25 for the first checked bag, it may be worth keeping an airline specific branded credit card just for the baggage savings.

Three cards immediately come to mind:

  1. Chase United – When you book your flights with your United travel credit card, you and one companion on the same itinerary can each check a bag free of charge.  WIth a $95 annual fee, it would only take one round trip as a couple, each with a checked bag, to justify that expense.
  2. Citi American Airlines – This benefit is similar to the United policy except you get one free checked back for yourself and up to four traveling companions booked on the same itinerary.  The annual fee for this card is also $95.
  3. Delta Gold SkyMiles from American Express – Delta has the best free baggage policy with their card, as they allow a free checked bag for up to nine people on the same reservation.  Guess what the annual fee is for this card?  $95.

Considering the fact that airlines made 1.7 billion dollars on baggage fees in the first half of 2012, I’d say this is a pretty good incentive to keep the card.

Travel Credit Card Benefit: Access to discounted award flights rates

As far as I know, this benefit is exclusive to the Citi American Airlines product.  Every quarter, American publishes select domestic US and Canada markets that you can fly to using a discounted milage balance.  You must be a Citi American Airlines card holder (various types) in order to have access to these discounted rates.

Economy tickets can be purchased for 17,500 miles, and premium cabins can be purchased for 42,500 miles.  These both represent a discount of 7,500 miles.

At this time, you can book flights as late as December 31st, 2012.

On a somewhat related note, Rene from Delta Points reports that you have access to more low level award availability if you have a Delta American Express.

Booking Rebate:

Citi American Airlines – If you book award travel (pay your taxes and fees) using your Citi American Airlines card, you can receive a 10% mileage rebate up to 10,000 miles per year.  This means that if you book an award flight for 50,000 miles, you’ll be rebated 5,000 miles.  If you book an award for 100,000 miles, you’ll be refunded 10,000 miles.

Us Airways – card holders get a 5,000 mile rebate when using the card to book award flights.  Please note that this is only valid on US Airways metal (flights owned and operated by US Airways).

Chase Priority Club Visa – This card also offers a 10% rebate each year on awards booked with points.  The limit for this card is up to 100,000 points for a rebate of up to 10,000 Priority Club points each year.  The annual fee for this card is $49.

Priority Benefits as a Travel Credit Card Benefit

Chase Priority Club Visa - You’ll get Priority Club Platinum status as long as you have this card.  I’ve personally had Platinum for about 6 months and haven’t found it anything too exciting.  However, I understand that people typically get better benefits and upgrades outside of the US in places like Asia.

Hilton Citi Reserve – Hilton Gold comes with this card, and I do find that to be a very valuable benefit.  This is definitely worth the $95 annual fee.

Most of the airline cards offer priority boarding (see the free baggage list above), but I think that’s not really a big deal.

Lounge Access

The Platinum Card from American Express Platinum – This card comes with a whole slew of benefits that may justify the annual fee, depending on benefits.  Most notable is the free lounge access when you fly domestic on American, US Airways, and Delta.  US Airways also allows you to enter their lounges even if you’re not flying with them.  Last week while flying Southwest, our family was able to access the US Airways lounge in Buffalo.

You also get access to the Priority Pass Select program which gives you free lounge access at all the Priority Pass Select locations (domestic and international).  Visitors cost an extra $27 person.  Last month I was in the VIP lounge in Quito, Ecuador, which was really nice.  I got in free along with my 3 year old (visitors ages 4+ must pay).

My personal strategy will likely be to rotate the Platinum card personal to the Platinum card business to the Mercedes-Benz Platinum.  That way each year I get all the benefits, but also get a sign up bonus.

Ink Bold  or Ink Plus- Depending on how often you travel, you may be satisfied with the two free lounge visits you get with the Ink Bold.  Since lounge access usually costs at least $50 (if you can even pay to enter), then the $95 fee is offset by two lounge visits.

Travel Credit Card Benefit: Member Anniversary Bonus

Chase Southwest Premier card – Every year on your card member anniversary you’ll get a bonus of 6,000 Southwest points.  The Wanna Get Away value of those points is $100.  The bonus points help justify the $99 annual fee.  The Southwest Plus card has an annual fee of $69 and they give 3,000 points at your card member anniversary.  The $50 worth of points makes the $69 fee much more manageable.  The business version of the card has the exact same annual bonus as the Southwest Plus card.

Chase Priority Club Visa - After your first anniversary year (you don’t get this until you’ve had the card for a year), each year card holders get a certificate for one free night at any Priority Club hotel.  This even includes their most expensive properties.  The annual fee for this card is $49.

US Airways Premier World – Each card anniversary, you’ll get 10,000 US Airways miles.  If you conservatively estimate the value of these points to be 1 penny each, then you’re still getting a great deal for the $89 annual fee.  ** This benefit may only be available to certain card holder so read your terms and conditions closely.

Keeping points flexible

I’m giving some pretty serious thought to keeping either my Chase Sapphire Preferred or my Ink Bold simply to keep the flexibility of my Ultimate Rewards points.  Since I have over 150,000 Ultimate Rewards points, I’m willing to pay a $95 fee to keep the option to transfer them to United, British Airways, Korean, Southwest, or Hyatt as needed.  On the other hand, I’ve never done this with American Express Rewards because the cards come with a much higher fee and there are less appealing transfer options.

Spending Bonus Points and other benefits with the card:

This is almost silly to add to the list, but I guess it’s worth mentioning that your card might have a bonus spending category that you really like.  This is the case with the Ink Bold.  5x at office stores is hard to beat – especially if you buy gift cards at your office supply store.  Also, if you spend a lot overseas, having a 0% foreign currency exchange fee card could justify an annual fee.

Wow.  This list turned out much longer than I anticipated when I started.

If you think this information would be helpful to others, would you take a second and tweet it or share it on Facebook?

What did I miss?  I’m sure there are some great travel credit card benefits beyond one year that I overlooked!

Comments

  1. says

    Didn’t see mention of the 5000 mile discount when booking US Airways awards if you have the US Airways card. I think that is a great benefit.

  2. says

    I have a United card that I’m thinking about canceling this year. I realized when I booked our Paraguay trip recently that we only really ever fly international, and as a result we don’t pay for our 2 checked bags anyway. The other perks like priority boarding and the lounge aren’t really worth $95 to me.

    All of our mileage benefits are better with our Chase Sapphire card.

    Craig, tell me if I’m not thinking correctly. :)

    -j

    • says

      Jason,
      I completely agree with you. The only reason I’d keep the card would be for free domestic bags. But, you’re right that the Chase Sapphire Preferred has better earning potential with 2x on travel and 2x on restaurants.

  3. bedmondson says

    I have booked a flight using Chase ultimate rewards for January. I want to cancel my card in December to avoid the annual fee. Is this ok? or will can it affect my reservation?

    • says

      If you already have the reservation then it will not be impacted if you cancel your card. The only way a person would be impacted is if they still have Ultimate Rewards points in their account – they will lose those. If you have other points I suggest you transfer them out to one of their partner airlines or hotels before you cancel. I hope this helps.

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