About a week ago, I wrote about when to cancel your credit card and concluded that often it’s best to cancel right before an annual fee comes due. I also mentioned that sometimes it’s worth paying the annual fee because the benefits outweigh the fee, so I thought I’d share a few credit cards that I feel would be worth holding onto, despite a $50-100 annual charge. I don’t have all these cards yet, but they are on my “wishlist” for 2012, partly because of fantastic sign-up bonuses and partly because of the ongoing benefits they provide even after the first year.
Chase Priority Club Visa
Joining Bonus: 60,000 Priority Club points with first purchase (80,000 if targeted)
Annual Fee: $49
Ongoing Benefits: No foreign transaction fee, 10% rebate on reward redemptions, annual free night certificate
Overall Thoughts: Saving 2-3% on foreign purchases is a great way to conserve cash, and we’ve had significant savings come from the reward rebate. A 50,000 point stay will effectively only cost you 45,000 points – and those points quickly add up to an amount that equals another free night. Best of all is the annual free night certificate, which is good at any hotel regardless of cost. Can you guess what it would cost to stay at a fancy Intercontinental resort in London during the Olympics? The answer is FREE if you use your annual night certificate. Well worth the $49 fee. (The offers for the Chase Marriott Reward Premier & Chase Hyatt Visa similarly pay for themselves)
Chase Sapphire Preferred
Joining Bonus: 50,000 Ultimate Rewards points after $3,000 spend
Annual Fee: $95
Ongoing Benefits: No foreign transaction fee, 7% points bonus, Flexible transfer options
Overall Thoughts: A card without foreign transaction fees is hugely valuable for travelers, and a 7% points dividend is icing on the cake since that really means you’re earning 1.07 points per dollar spent. But my favorite benefit of this card are the transfer options – you can move those points over to airline programs such as United, Southwest, or British Airways or hotels including Hyatt and Marriott. You shouldn’t underestimate the value in flexibility! There will be times when your preferred hotel chain isn’t available in the location you want, so having more options can multiply your chances of scoring a free award night instead of resorting to paying cash. Plus, it allows you to save miles as airlines announce promotions. For example, if you normally only collect British Airways miles, you wouldn’t be able to take advantage of promos like saving 15,000 miles on an award flight with United to Africa. Having Ultimate Rewards points means you can take advantage of promotions with multiple programs – thus saving you miles (and money) in the long run.
American Express Starwood Preferred Guest
Joining Bonus: 10,000 SPG points after first purchase + 15,000 additional points after $5,000 spend
Annual Fee: $65
Ongoing Benefits: Flexible transfer options with transfer bonuses
Overall Thoughts: SPG points are hugely valuable. Not only can they be redeemed at Starwood properties (Westin, Sheraton, and more), but you can transfer them to any of their airline partners, which is valuable for the same reasons described in the Chase Sapphire Preferred Section above. Even better, Starwood offers transfer bonuses. You will always get a bonus of 5,000 miles when you transfer 20,000 miles. Since I value 5,000 miles at $50-100, even one transfer per year will basically pay for the annual fee.
Barclays US Airways Mastercard
Joining Bonus: 40,000 US miles after first use
Annual Fee: $89
Ongoing Benefits: 10,000 bonus US miles annually; 5,000 mile discount on reward redemptions on US Airways metal; two $99 companion passes each year
Overall Thoughts: This card often gets overlooked because the sign-up bonus isn’t as high as other cards. However, if you fly US Airways frequently, it’s worth a look. I don’t think US Airways miles are as valuable as other airlines’, but even a conservative valuation makes the annual bonus of 10,000 miles worth at least $100 – totally covering the cost of the annual fee. The discount on reward bookings could also save about $50 in value with every booking, though admittedly excluding partner airlines with this discount is a shame. Lastly, the companion passes come with a slew of blackout dates, but if you use them strategically, each of these offer $150+ in value.
Chase United MileagePlus Explorer Visa
Joining Bonus: 25,000 UA miles after first use (targeted 50,000 miles offer)
Annual Fee: $95
Ongoing Benefits: Free checked bag on every flight for you and a companion, two free lounge passes annually
Overall Thoughts: I don’t regularly check a bag, but if you do, that could save you and your a companion $100 on just one trip, thus entirely covering the annual fee. You’re money ahead after two or more flights. The lounge passes normally cost $39 each if purchased online, so that’s another $78 in savings every year. Definitely worth considering.
There are plenty of other credit cards out there that are worth looking into, so don’t take this as an all-inclusive guide. Choose the cards that offer the best value for you, and figure out how to maximize their benefits for the most savings on travel.