Changes in Premium Travel Credit Cards
American Express is introducing new platinum business cards, but with higher annual fees that may prompt cardholders to reassess their value.
Recently, American Express announced that both the consumer and business versions of their Platinum Credit Card will now carry an annual fee of $895, marking a significant 29% increase from the previous fee of $695. Similarly, Chase raised the annual fee for the Sapphire Reserve Card to $795—up 45% from the former rate of $550. Meanwhile, in July, Citi launched the Citi Strata Elite, a new premium travel card priced at $595.
Many credit cards are also revising the terms for accessing perks like airport lounges. For instance, Capital One recently informed customers using the Venture X and Venture X Business cards, which both have annual fees of $395, that free lounge guest access will no longer be available.
With these fee hikes, it’s crucial to evaluate whether the benefits offered by these cards justify the costs. Ted Rothman, a senior industry analyst at Bankrate, noted, “The annual fee isn’t necessarily a bad thing; you just need to ensure that you’re getting good value.” He added, however, that maximizing these benefits can be increasingly challenging.
Understanding Travel Card Value
Experts suggest that travel reward cards can be worthwhile if you maintain a balance each month, but any interest charges could diminish their benefits. Sally French, a travel expert at NerdWallet, mentioned that the average credit card interest rate hovers around 20.13%, generally higher for reward cards. This highlights the need to consider whether a travel credit card is a sensible investment.
Choosing Between Card Types
There are mainly two types of travel credit cards: co-branded and general-use cards. Co-branded cards are often linked to specific airlines, hotels, or cruise lines, providing more targeted benefits. If you frequently fly with a particular airline or stay at certain hotels, these cards might offer more value.
For instance, airline credit cards can provide perks like free checked bags or prioritized boarding, which are beneficial when traveling. However, it’s important to check if the airline has partnerships with others for easier point or mile transfers.
On the other hand, general travel credit cards offer flexibility, making them suitable for those who don’t want to align themselves with a single brand. Some may have low or no annual fees, although those might not provide the same rewards or benefits as higher-fee options.
Figuring Out the Best Card for You
It’s essential to pesce rewards and perks against your travel habits, according to Rothman. For less frequent travelers, opting for a card without an annual fee is often advisable. French added, “Why pay for a card with perks you might not even use?”
If you find you’re not utilizing the benefits of a card with a high fee, it might be worth considering downgrading to a more affordable or even free card, which Rothman believes would be better for your credit score than canceling the card entirely.
