When I first started covering credit cards, I was skeptical of annual fee cards. It seemed like a waste of money to spend $50 to $100 a year or more on another piece of plastic. Cards that charged three-figure annual fees seemed even more out of reach.
I assumed the only people willing to pay hundreds of dollars a year to own fancy cards made from metal instead of plastic were ultra wealthy cardholders who cared more about flaunting their status than reaping card rewards. It wasn’t until I started investigating super premium cards for a 2015 story for CreditCards.com that I began to think differently about high-priced rewards cards.
Many of the super premium cardholders I talked with were sophisticated bargain hunters who told me they saved a ton of money with their super premium cards. “My annual fee is $450 per card and the travel perks that the card offers more than make up for the $450 that I pay,” said one American Express Platinum card holder.
“I’ve only had the card two months, and I’ve saved over $1,000 on hotels,” said another frequent traveler who had just recently opened a Citi Prestige card. As I scrolled through the long lists of perks offered by super premium cards such as the Citi Prestige card and the Ritz Carlton Rewards card, I was impressed by how valuable some of the benefits were. These cards were handing out so many extravagant freebies — including three-figure annual travel credits, free hotel stays, free rounds of golf, access to airport lounges with free food and drinks and other pricey benefits — the perks essentially canceled out the cards’ annual fees. As long as you traveled heavily enough to take advantage of the cards’ benefits, you could potentially save hundreds of dollars on purchases that you may have already been planning to make anyway.
Chase ups the ante with its Sapphire Reserve
Despite being impressed with the cards’ premium perks, I still wasn’t sold on applying for an annual fee card. My husband and I make solidly middle-class incomes and don’t have a ton of savings; plunking down a $100 or more for a credit card didn’t seem like a wise investment.
But then Chase debuted a brand-new card that offered such extreme travel and rewards perks that I changed my mind. Not long after I reviewed the new Chase Sapphire Reserve card for CreditCards.com, I convinced my husband to apply for it. He travels fairly regularly for work. I estimated he’d easily be able to rack up enough rewards and travel credits to afford us multiple free trips to visit our families in Texas and Canada. I also figured we’d be able to meet the $4,000 spending threshold for the 100,000-point sign-up bonus fairly easily just by stocking up on toddler items and other household supplies. For us, the new Sapphire Reserve card seemed like an ideal opportunity to save money on travel we had previously been carefully saving up for.
So far, it seems to be working out. We don’t normally spend $4,000 in such a short time period — even when we purchase a lot of supplies — and so we got around the sign-up bonus’s spending challenge by purchasing gift cards for the retailers we use most often, such as our local grocery and big box discount stores. We’ve also carefully planned out our rewards strategy by having my husband shift all his travel and restaurant spending to his new Reserve card. In addition, we’re certain we’ll earn back the card’s $300 travel credit fairly easily just by using the card for trips we were planning to buy already.
Applying for such an expensive card was risky. But we felt confident we could afford it. We’re now looking forward to cashing in on up to $1,000 or more in free travel just by using the card’s generous sign-up bonus. Over the next year, we’ll also pay close attention to the amount of rewards my husband racks up on his card. If he earns enough free travel to cancel out the card’s annual fee — even without the sign-up bonus — we may decide to keep the card around for more than just the card’s first year.