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What To Do When That Annual Fee Hits


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Updated, April 21, 2020

What You’ll Learn In This Lesson

How to max out the value of your premium travel cards
When to keep a high annual fee card open
What to do if you opt to close the account

As we have seen by now, some of the best travel rewards cards out there also come with annual fees that can be very intimidating.

For instance, the Chase Sapphire Preferred® Card (This card is not currently available on CardRatings) and Ink Business Preferred® Credit Card (The information related to this credit card has been collected by CardRatings and has not been reviewed or provided by the issuer of the card.) both have an annual fee of $95.

Taking the cost up several notches are the Chase Sapphire Reserve®, which renews at $550, and the The Business Platinum Card® from American Express, which weighs in at a hefty $595 annual fee (See Rates and Fees; American Express is a CardRatings advertiser).

Yet, many of these cards have legions of fans in the travel rewards space, all of whom swear by them and have had them for years.


Because they know how to do something that most people do not – get more value out of the cards than what the annual fee costs.

How To Get Top Value From Your Premium Credit Cards

Even if you travel only one or two times a year, you can get your money’s worth from most premium travel credit cards.

These benefits can usually be grouped into a few categories:

Statement Credits

The most direct way to get value from your credit card is by using them for things that earn you a statement credit. A statement credit basically works like an eraser by providing a credit to balance out an expense.

Some common statement credits include:

  • Annual Travel Expenses: These are general expense for flights, hotels, and transportation. The most versatile and generous out there is the $300 you get for travel expenses with Chase Sapphire Reserve®. It works even for car rentals, subways and parking.
  • Annual Airline Incidental Credits: This is an airline-specific version of a travel expense credit. It is usually for incidentals only, rather than actual flight tickets. It is usually offered with an airline that has its own co-branded card. An example is the $100 airline credit on a pre-selected airline that comes with the American Express® Gold Card (See Rates and Fees).
  • Global Entry ($100) or TSA Pre✓® ($85): Depending on your credit card, you can get this benefit once every four years. Refer to Lesson 18 for details on Global Entry and TSA Pre✓®.
  • Shopping: For example, you get up to $200 of credit annually at Dell.com if you have The Business Platinum Card® from American Express. On The Platinum Card® from American Express (This card is not currently available on CardRatings), you get $100 (enrollment required) for shopping at Saks Fifth Avenue. (Annual fee is $450, )
  • Commuting: On The Platinum Card® from American Express, you get up to $200 of Uber credits annually.
  • Dining: With American Express® Gold Card you get up to $10 a month for food deliveries with GrubHub and Seamless or at a number of other restaurants (enrollment required).

Earning Bonuses

Most premium cards have enhanced category earning bonuses.

  • The Platinum Card® from American Express earns 5x points on flights booked with airlines and on American Express Travel.
  • The Business Platinum Card® from American Express earns 5x points on flights and hotels made with American Express Travel only.
  • The Chase Sapphire Reserve® has a 3x point bonus on travel (after earning your annual travel reimbursement) and dining expenses.
  • The Chase Sapphire Preferred® Card has a 2x point bonus on travel and dining expenses.

Usage Bonuses

Premium cards also come with some pretty sweet ways to extract more value when you use them to book travel directly. The Chase premium cards will get you bonuses on between 25%-50% extra when booking travel on the Chase Travel Portal.

I especially appreciate using the 35% point rebate perk with American Express that cost me less points to book a flight, yet, lets me earn actual miles flown with the airline’s loyalty program. This is unusual because traditionally, when you use points to book a flight, you do NOT get credit for miles flown.

Scoring the most value from American Express Membership Rewards® points for U.S. domestic flights

For this to work, a few assumptions must be made:

  • We treat one American Express Membership Rewards® point to be the same value as one mile on a domestic airline like United, Delta, American, Alaska, Southwest and others.
  • You have The Business Platinum Card® from American Express and have selected one of the domestic airlines as your preferred airline to earn a 35% rebate.
  • All flights are booked on the American Express Travel portal.

This can get confusing, so let’s walk though the example of a flight on Delta Airlines from Los Angeles to New York City. Note: American Express Membership Rewards® transfer 1:1 to Delta Skymiles, so this is a good apples-to-apples comparison.

We’ll explore three ways to price this flight in the main cabin on Feb 22, 2020:

  • The cost of a revenue flight on Delta.com.
  • The cost in miles (and cash for fees) to redeem this flight on Delta.com
  • The cost of the same flight on the American Express Travel portal using American Express Membership Rewards® points.

I’ve gone ahead to check the miles between Los Angeles and New York City: 2,475 miles.

REMINDER: 100 American Express Membership Rewards® points are equal to $1 for travel booked on the American Express Travel portal. The transfer ratio between American Express Membership Rewards® and Delta Skymiles is 1:1.

Revenue Flight On Delta.com

Pricing the flight out on Delta.com gives us the following:

  • Cash price: $219.30 (or 21,930 Member Rewards® points)
  • Skymiles earned: 2,475
  • Security fee: included
  • Net $/points/miles used: 19,455 (21,930 – 2,475)

Redemption Flight On Delta.com

Here’s what the same flight would cost as a redemption:

  • Cost in Skymiles: 16,000 (or 16,000 Membership Rewards®)
  • Security fee: $5.60 (or 560 points)
  • Miles earned: none
  • Net $/points/miles used: 16,560 (16,000 + 560)

How To Get The Best Value On Amex Travel

If you can get the 35% point rebate with the Amex Travel portal, you’ll get the best possible deal. To make it easier to compare, we’ve converted all Delta Skymiles and cash values to American Express Membership Rewards® points at a 1:1:1 ratio.

  • Cost in Membership Rewards® points: 21,930
  • Bonus Points rebated: 7,675
  • Actual cost in points: 14,255 (21,930 – 7,675)
  • Delta Skymiles earned: 2,475
  • Security fee: included
  • Net $/points/miles used: 11,780 (14,255 – 2,475)

Verdict: Winner!

Other Perks

Many of the premium cards come with high-value perks if you have a use for them. These include:

  • Anniversary Renewal bonus: Many airline and hotel co-branded cards come with a renewal bonus, such as free miles or hotel certificates.
  • Access to lounges: Several of the high annual fee cards come with a free Priority Pass membership that grants you access to lounges across the world. Holders of The Platinum Card® from American Express and The Business Platinum Card® from American Express have more options, such as American Express Centurion Lounges and Delta SkyClubs if they are flying Delta. Check out Lesson 15 for more details.
  • Free Checked Bags: Most co-branded cards offer one free checked bag as a perk.
  • Free GoGo in-flight wiFi passes: This is a perk offered annually with The Business Platinum Card® from American Express.
  • Baggage and Travel insurance: This can really add up if you routinely pay for trip cancellation/interruption insurance. Refer to lesson 17 for details.
  • Primary automobile rental insurance: The only cards that offer primary collision/loss damage waiver insurance are the Chase premium cards like the Chase Sapphire Reserve® the Chase Sapphire Preferred® Card, and the Ink Business Preferred® Credit Card (but only for business trips). Primary coverage means that in case of damage or loss to the rental vehicle, the policy with the credit card kicks in. So, you can decline the car rental company’s overpriced policies without having to use your own auto policy. Refer to lesson 14 for a deep dive.
  • Discounted offers: American Express cardholders get access to an excellent perk called American Express Offers. These are digital coupons that you add to your American Express accounts, and when you use them, you get a statement credit for the discounted amount. The 20% discounts on hotels are especially lucrative.
  • Elite status: This is way down the list because the perks that come with entry-level elite status with an airline or hotel loyalty program may not be that valuable. But it’s worth a mention in case this is something you value.

Reasons To Keep The Account

As the annual anniversary date of your annual fee card approaches, you should start thinking about what you want to do with it.

Many people who do not know how to get the maximum value from the cards will be inclined to close the accounts. But there are several good reasons to keep the cards open, such as:

  • You were able to use the tips above to get more value out of the card than the cost of the annual fee.
  • You want to keep a favorable credit utilization rate, one of many factors that contributes to your credit score. The higher the amount of credit you have available to you, the better your credit utilization rate.
  • You want to maintain a good relationship with the banks to continue to get more cards in the future. Banks in general have gotten a lot better at looking at the totality of your relationship with them. If it looks like you are gaming the system, you will very likely get shut down. A pattern of closing cards just after an annual fee hits does not encourage the bank to want to continue doing business with you.
  • You think you can get a retention bonus. If you used the card significantly through the year, there is a chance that you may be offered a bonus to keep the card open. You’ll have to meet a new minimum spend to earn the retention bonus, usually without impacting your 5/24 number.
  • For some cards, you can do a product change and downgrade to a no-annual fee card. These include:
  • If you are active duty military, or have more than 30 days of active duty in the National Guard, many banks waive the annual fee as part of the Service Members Civil Relief Act and the Military Lending Act. Some of our favorite travel rewards cards with waived annual fees include:

If You Must Close The Card

If closing a card is the best option for you and you are sure it won’t risk your relationship with the bank, make sure you have a plan for all the hard-earned points in the account.

Ideally you want to move your points to another account with the bank, rather than transfer them all to its airline or hotel partner because partner transfers are one-way.

Option 1: Transfer To Another Account You Own

The simplest way is to move the points to your no-fee credit card account with the same account, until it is time to get a new premium card.

Some no-annual fee examples include:


American Express

Capital One

Option 2: Transfer Them To Another Person’s Account

Another option for Chase and Capital One customers is to transfer the points to an account owned by someone else in the household. Capital One steps it up a notch with by allowing transfers to any Capital One account.

Unfortunately, you cannot transfer American Express Membership Rewards® between American Express accounts.

Option 3: Use Them Or Move The Points To A Transfer Partner

If you actually have a trip coming up, it’ll make sense to use the points, either with the bank’s travel portal, or transferring them to a transfer partner. If you choose to transfer the points to an airline or hotel loyalty program, just remember that the miles and points could expire if there is no activity.


In the eight years of so I have been nerding out on travel rewards, I have closed only five cards, downgraded six, and earned six retention bonuses.

I keep as many cards open, for as long as they make financial sense.

The bottom line is that I would like to still be traveling the world on miles and points well into the future, so I want to give the card issuers a reason to keep me as a customer.

If you found this course on travel rewards helpful, you may also enjoy this free illustrated guide, packed with many other ways to get more for your buck and win back your financial independence.

For rates and fees of American Express cards mentioned in this post, please see the following links: The Business Platinum Card® from American Express (See Rates and Fees); American Express® Gold Card (See Rates and Fees); The Platinum Card® from American Express (See Rates and Fees); The Blue Business® Plus Credit Card from American Express (See Rates and Fees)

Course content originally produced by ChooseFI was edited/updated by CardRatings for this lesson.