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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.
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:
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:
Most premium cards have enhanced category earning 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:
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:
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:
Redemption Flight On Delta.com
Here’s what the same flight would cost as a redemption:
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.
Many of the premium cards come with high-value perks if you have a use for them. These include:
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:
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:
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.