American Express announces the new Platinum business card.
With kind permission: American Express
While issuers push higher annual costs for certain premium travel reward credit cards, experts say that it is important for consumers to consider if these cards are worth the cost.
On Thursday, American Express announced that the consumption and business versions of its Platinum credit card will now have annual costs of $ 895. It is around 29% higher than the current cost of $ 695 per year.
In June, the Chase Sapphire Reserve card increased annual costs to $ 795. It is a leap of 45% compared to $ 550, its previous annual cost. In July, Citi introduced the Citi Strata Elite, a premium travel credit card which costs $ 595 per year.
Other credit cards have changed the conditions for access benefits such as airport salons. Earlier this year, Capital One Announced that from February, customers using its Venture X awards and its Venture X business cards – each with $ 395 of annual costs – will no longer be able to bring guests for free.
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Higher annual fees mean that you should assess whether the advantages of the card are worth the cost.
“The annual costs are not intrinsically bad; you just need to make sure that you get value (the card),” said Ted Rossman, the main analyst of the industry at Bankrate. “It becomes more difficult to maximize, however.”
A habit will easily “decrease” the value of the travel card
A travel reward card will probably not be a good value for money if you are a balance of one month to the other, according to experts.
“Any interest that you should easily decrease the value of these advantages,” said Sally French, travel expert at Nerdwallet.
It can also be more difficult to repay the debt. Although the average annual percentage rate for credit cards is around 20.13%, the typical rate of premium travel cards can be closer to 25%to 30%, according to Rossman.
“In general, reward cards charge higher prices,” he said.
Here is how to decide if a travel credit card is worth the investment, according to experts.
Decide: Large travel card or brand specific?
You will meet two types of travel credit cards. Co-marked credit cards are generally linked to airlines, hotels or even specific cruise channels, and offer more precious advantages in this brand, said French.
If you frequently use a specific airline or tend to stay with a certain hotel chain, a co-marked credit card can be worth it, according to experts.
A credit company credit card, for example, can have advantages such as free checkered bags, priority boarding, premium status levels and sometimes discounts or points for spending in this airline.
“These are only free (verified) bags on this airline,” said French. “Your Southwest credit card will not get anything on United.”
Some airlines belong to partnership networks such as Star Alliance, Oneworld or Skyteam. If you are considering a brand specific to the brand, see if the company has partnerships that allow you to transfer points or miles to allied brands.
On the other hand, general travel cards are “really good for people who do not want to be married to a specific brand”, as you can win and use rewards more widely, said French.
Some travel credit cards do not charge annual costs; For those who do, the cost can vary from $ 95 to more than $ 500 per year, according to Nerdwallet. Keep in mind that travel cards with little or no fees may not offer the same level of advantages and rewards as paid cards.
The two types of travel cards tend to have a set of similar advantages, including credits for TSA Precheck and other pre-deprecating subscriptions, and large connection bonuses when you spend a certain amount of money on the card in a short period of time after opening. As a frequent traveler, such advantages can help ensure that the card costs were worth the cost, according to experts.
To assess the advantages of the card, look at a detailed list of advantages on the issuer’s website, said French. A card can charge annual fees, but say that it includes a free checkered bag and a number of guests. With just this advantage, the card could pay for a trip or two for a family.
How to know which card suits you best
Although some advantages and rewards may seem attractive, it is important to consider your travel habits and your lifestyle, said Rossman. Also consider what your credit habits look like, say the experts.
For those who do not travel often, a travel credit card without annual costs will probably be the best option, said French.
“You don’t want to pay annual fees on a credit card that has advantages you may not use,” she said.
If you travel frequently during a given year and generally with a specific airline, a co-marked credit card can make sense, said French.
If you currently have a card with high annual fees, but you do not realize that you do not use it the most, you may be able to go to a cheaper or free card offered by the transmitter, said Rossman.
It will be better for your credit rather than completely closing the card, he said.
