Many premium travel credit cards aimed at wealthy customers now come with higher annual fees.
On Thursday, American Express unveiled long-awaited updates to its Platinum card, which now carries an $895 annual fee, a 29% bump from the current fee of $695. Amex says the card now comes with $3,500 in annual benefits — twice the level of the current card — mostly in the form of credits.
The move is the latest escalation in the luxury credit card arms race. Earlier this summer, JPMorgan Chase bumped the annual fee on its Sapphire Reserve by 45% to $795. The firm says cardholders can earn $2,700 in annual benefits.
These and other companies that offer top-tier, high-fee cards typically offer lower-cost versions that come with scaled back perks. If you’re in the market for a new card — or are just having sticker shock on one you have — figuring out which is right for you will require some introspection, says Brian Kelly, founder of The Points Guy.
“Everyone has to do a personal analysis,” he says. “You have to look at your travel patterns and the way you shop and do the math.”
Here are three things he says to focus on.
1. Airport lounges
“With the premium cards, the lounges are one of the biggest perks,” Kelly says. “The first place I would start is there.”
Premium cards often grant members access to affiliated airport lounges. And if you’re not getting the kind of lounge experience you want, Kelly says, a high-fee card may not be worth it. That means you should not only check that your home airport or ones that you frequently fly into have the lounges you want, but also review whether you’ve typically been able to get in without a wait.
If your favorite premium card gets you into a lounge you like, it may be worth the price tag for frequent travelers — “even four times a year,” says Kelly.
“It’s good food, and drinks are free. You can get easily $50 in value of just drinks and food, considering airport food is so expensive and poor quality,” he says. “Then there’s a value to just enjoying it for people who like travel and enjoy the lounge, and it takes stress off.”
2. Credits
In order to maximize the value of a high-fee card, you have to take advantage of the various statement credits on offer for purchases at select vendors, Kelly says. Chase’s rollout, for instance, touted a new $300 credit for purchases at StubHub. Amex Platinum cardholders get credits at Lululemon, Oura and Uber.
If you scan the list of brands and retailers and realize that these are things you’re paying for already, then a premium card is easier to justify, says Kelly. But if you’d have to start shopping someplace new just to get the perks, maybe you should reconsider.
“If you’re not really a Lululemon fan and you’re getting $75 in statement credits a quarter, that’s not really $75 of value,” he says. “But for people whose kids love Lululemon and shop there all the time, that may well actually be a $300 perk.”
3. Lifestyle
Notably, in order to receive any of the statement credits, you’ll have to put in a little effort. You generally have to log into your credit card company’s portal and opt in.
The same idea applies to many of the perks that come with these cards. The points you earn can be valuable and the benefits generous, but you’ll have to keep up with the rules of earning them and getting the most bang for your buck at the credit card’s partner companies, such as airlines and hotels.
“There are a lot of people who are too busy or who find this confusing,” Kelly says. “That’s why these credit card companies have all these perks — because not everyone is taking the time to do it.”
If it’s going to be a grind to keep up with, a credit card that charges several hundred dollars in fees may not be for you — especially when many of the lower-tier cards come with plenty of attractive perks, Kelly says.
“If you’re not easily doing the math, then I think it’s time to think about downgrading or getting a different card that you know for sure is going to be a winner.”
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