When it pays to pay an annual fee

Anonymous · ‎03-01-2019

I have 4 cards that have a $95+ annual fee. I was contemplating getting rid of all but 1 of them, and started researching. Turns out I'm keep 3 and only getting rid of 1.

Amex gold - $250 AF. This is my daily driver, 90%+ of all transactions are put on this card (forces me to PIF each month), and based on my spend habits, it makes over $3,000/ year in rewards value, a 7% cash back equivalent return on spend. Even if I rarely used the card, my annual fee is only $30 after using the $120 restaurant credit (lunch 1x month at cheesecake), and $100 travel credit.

Chase SWA Premier - this is the card we use whenever amex is not accepted. $99 annual fee, but I value the 6 000 rapid rewards award at each anniversary as a wash on the fee. Rather than getting rid of the card, I'm actually upgrading to the SWA Priority card. $149 AF, but 7,500 bonus RR points each year ($135 value) plus $75 annual travel credit, ($210 value vs $149 AF) and I'm making $61 a year by keeping this card behind my amex with little/no spend other than vendors who dont take amex and an occassional Southwest flight.

Amex HHonors Ascend. $95 annual fee. Thought about downgrading to no fee HHonors. Only use this card to pay my Hilton timeshare annual dues and hilton hotel spend (maybe $3-5k annual spend). Given low use, I didnt think the 12x points was worth the AF, until I remembered this card comes with a generous Priority Pass Lounge Access which includes 10 passes per year that can be used for anyone. Well worth the AF even if I just use lounge access 1x a year for a family of 4.

Chase United Explorer. $95 AF. Never use the card. One benefit is free checked bag and 2 United Club Passes, but dont fly United enough to justify paying $95/year for those perks.

Summary - keeping my Amex Gold and Ascend HHonrs, upgrading my Chase Southwest Card while transferring my CL from united to southwest and then cancelling my United card.

Curious if there are other cards like Southwest Priority out there where perks are accretive to AF even with limited/no spend?

Anonymous · ‎03-01-2019

@Anonymous wrote:

Curious if there are other cards like Southwest Priority out there where perks are accretive to AF even with limited/no spend?

There's actually a lot. Two of the better ones that come to mind if you're focused on easy use of perks are the Pathfinder from Penfed (no fee, global entry every 4 years and $100 airline incidentals every year) and the Premier Travel Rewards or whatever it is actually called from Bank of America ($95 annual fee, but $100 in airline incidentals every year. Plus I think they offer global entry every 4 years too).

Anonymous · ‎03-01-2019

There’s a few. Pretty much any hotel card that offers an annual free night normally pays for the annual fee without you really having to spend on the card. Some other cards are:

Citi AA Platinum (99$ AF) - 2 flights (or just 1 flight if you have others on your iteniary) a year pays for this. You and up to 4 others traveling with you get the 1st checked bag is free.

Chase Hyatt (75$) - no brainer for the annual free night. You would be hard pressed finding a Hyatt cheaper than 75$.

Marriott Bonvoy (95$) - Same as Hyatt pretty much

simplynoir · ‎03-01-2019

Delta Platinum and Reserve. Companion certificates awarded yearly after the 2nd AF hits are worth it even if you never put spend on the cards.

FinStar · ‎03-01-2019

On a side note OP, if you are planning on closing the Chase UA card, you can have the limit reallocated to the SWA card.

staticvoidmain · ‎03-01-2019

@simplynoir wrote:
Delta Platinum and Reserve. Companion certificates awarded yearly after the 2nd AF hits are worth it even if you never put spend on the cards.

only reason I keep Delta Plat Amex. it's not just breakeven. $195 for a value of at least, on average, $600 is actually like giving me money. to keep the card.

Anonymous · ‎03-02-2019

@Anonymous wrote:
@Anonymous wrote:

Curious if there are other cards like Southwest Priority out there where perks are accretive to AF even with limited/no spend?
There's actually a lot. Two of the better ones that come to mind if you're focused on easy use of perks are the Pathfinder from Penfed (no fee, global entry every 4 years and $100 airline incidentals every year) and the Premier Travel Rewards or whatever it is actually called from Bank of America ($95 annual fee, but $100 in airline incidentals every year. Plus I think they offer global entry every 4 years too).

That's what lured me in. I don't fly much, so my trip planned later this year is going to be a party with free bags and free food onboard!

Anonymous · ‎03-02-2019

Among the four cards, Chase United Explorer would be the best for rental car as it provides free PRIMARY CDW.

EAJuggalo · ‎03-02-2019

Depends on how much you are renting, that coverage is available for a fee from AMEX.

I just added my third AF card tonight. I have the AMEX Gold, CSP and now a Navy Flagship. I got the Flagship with it's $49 annual fee because it reimburses GE for the primary and all AU. No charge for AU either.

EX700 TU 704 EQ 694 4/03/22
Cap1 QS-$4,500 Chase Freedom Flex- $800 Chase Freedom Unlimited- $1,000 Victoria's Secret- $1,200 Citi DC- $800 Amazon Store Card- $3,500 AMEX Hilton Honors-$1,000 Discover It-$1,000 Wal-Mart MC $290 Chase Sapphire Preferred-$5,000 NFCU Flagship $13,800 AMEX BCE-$1,000 AMEX Gold-$5,000 AMEX Delta Blue $1,000 Lowe's $5,000 Navy Platinum $17,000 AMEX BBP $2,000

Anonymous · ‎03-03-2019

A few different things can justify an annual fee. Basically, look at whether it covers a good benefit to have, like for example a free night at a hotel each year. I am thinking about possibly this Fall or sometime next year when I'm under 5/24 of applying for the IHG card. It's a Chase card. Holiday Inn is my favorite hotel.

If it's a case of two cards of the same family, one card might have an annual fee and the other doesn't. A well known example would be the Capital One Venture and the VentureOne.

When I got my American Express Blue Cash Preferred, it was a tough decision. I weighed my decision carefully on whether I should get the Preferred or Everyday. The Preferred has a $95 annual fee, not waived the first year, and the Everyday has none. The cash back structure for the Preferred is 6% at supermarkets, 3% at gas stations, and 1% on everything else. For the Everyday, it's 3, 2, 1. Assuming you make your gas purchases on another card and focus on just supermarkets, you calculate whether 3% cash back and no annual fee or $95 annual fee but 6% cash back is worth it. Here's how you do it. There's a 3% difference in the cash back rewards rate. Divide $95 by .03 and you get $3166.67. Divide by 12 and you get $263.89. This is the monthly minimum spend requirement you must meet for the Preferred to exceed the Everyday in value. I can easily meet that in monthly grocery expenses. take the $3166.67 annual spend and multiply by .06 and you get $190. Subtract the $95 annual fee and your annual cash back on groceries is $95. $190 is double $95. Multiply $3166.67 and you get $95 cash back. So the Everyday and Preferred meet at that point.

The Blue Cash Preferred is my only open card with an annual fee.