Are Premium Travel Rewards Credit Cards Worth the High Annual Fees? Updated: Jan. 17, 2019

While premium travel rewards credit cards can have some very nice bonuses and luxury perks, they also come with shockingly high annual fees. Can all of those rewards and perks really be worth it when you’re paying hundreds of dollars per year for the opportunity to earn them? Well, that’s what we’re going to find out. We compared 3 premium travel rewards cards to 3 low-fee travel rewards cards to see just how much value premium travel cards give. To see the results, and find out whether a premium travel card may be right for you, read on.

The contenders

For this comparison, we gathered some of our travel rewards cards to pit the best of the best against each other. In the premium card corner, we have the Chase Sapphire Reserve with an annual fee of $450 and The Platinum Card from American Express (a NextAdvisor advertiser) with an annual fee of $550. In the low-fee corner, there’s the Chase Sapphire Preferred, little brother to the Chase Sapphire Reserve, with a $95 annual fee that’s waived for the first year, the Citi / AAdvantage Platinum Select World Elite Mastercard with an annual fee of $99 that’s waived for the first 12 months and the Capital One Venture Rewards Credit Card with an annual fee of $95 that’s waived for the first year.

Introductory bonuses

Given that annual fees on credit cards seem to correlate with higher intro bonuses, we wanted to see how the premium travel credit cards fare in this category. Assuming you redeem the intro bonus points to maximize their value (for example, redeeming The Platinum Card from American Express’ points through American Express Travel and taking advantage of Chase Sapphire Reserve’s 1:1 transfer opportunity), the premium cards have higher intro bonuses — according to our Travel Rewards Credit Card Analysis, Sapphire Reserve’s bonus is worth $993 when the points are transferred to Hyatt Gold Passport frequent travel program. On the flip side, the low-fee cards have an average intro bonus of $735 — Sapphire Preferred’s bonus is worth $993 when the points are transferred to Hyatt Gold Passport frequent travel program, the Citi / AAdvantage Platinum Select World Elite Mastercard’s bonus is worth $595 in flights and the Capital One Venture Rewards Credit Card’s bonus is worth $500 in travel, according to our Travel Rewards Credit Card Analysis. That means the premium travel rewards cards and the low-fee cards have pretty comparable average intro bonuses.

However, to be fair to the low-fee travel cards, the average amount of money you have to spend on purchases in the first 3 months of card ownership to earn those bonuses is also significantly higher for the premium cards. The average spending requirement for the premium cards is $4,667 — Sapphire Reserve cardholders must spend $4,000 in the first 3 months to earn 50,000 points and The Platinum Card holders must spend $5,000 in the first 3 months to earn 60,000 points. On the other hand, the average for the low-fee cards is an easier to achieve $3,167 — Sapphire Preferred cardholders will earn 50,000 points after spending $4,000 in the first 3 months, Capital One Venture Rewards Credit Card holders will receive 50,000 bonus miles after spending $3,000 in the first 3 months and Citi / AAdvantage Platinum Select World Elite Mastercard members will earn 50,000 miles after spending $2,500 on purchases in the first 3 months.

Ongoing rewards

Surprisingly, both the premium travel rewards credit cards and the low-fee travel rewards credit cards earn similar amounts of rewards points or miles. The low-fee Capital One Venture Rewards Credit Card in particular is a miles machine, earning a ludicrously high 10 miles for each $1 spent on hotels booked through Hotels.com/Venture (note that this is valid through Jan. 31, 2020) and 2 miles for each $1 spent on all other purchases. One case of a premium travel card clearly earning more than a low-fee card noted in this post is with the two Chase cards, the premium Chase Sapphire Reserved and the low-fee Chase Sapphire Preferred. While the Chase Sapphire Preferred Card earns 2X points on travel and dining, Chase Sapphire Reserve earns 3X points on travel and dining, and when you redeem your points using Chase Ultimate Rewards, Chase Sapphire Reserve gets a higher 50% point value bonus compared to Chase Sapphire Preferred’s 25% bonus. Both Chase Sapphire cards also earn 1X points on all other purchases. The Platinum Card from American Express also offers some high ongoing rewards, as it earns 5X points on flights booked directly with the airlines or American Express Travel as well as 5X points on prepaid hotels booked through American Express Travel. Apart from that, though, this is a tough call.

Annual credits

Unfortunately for the low-fee cards, here the premium travel rewards credit cards have a distinct advantage. Two of the premium cards, The Platinum Card from American Express and the Chase Sapphire Reserve, both get regular, fixed amounts of credits for services which add a lot of value to the cards, in addition to points. For instance, The Platinum Card from American Express offers an annual $200 airline fee credit you can use to pay for incidental flight costs, an annual $200 Uber credit and a $100 fee credit every four years to pay for Global Entry or TSA PreCheck. In total, that’s a total of $500 in service credits your first year as a cardholder (and $400 the 3 years after), which pays for most of the card’s $550 annual fee. The only one of the low-fee cards with anything resembling that is the Chase Sapphire Preferred Card, which offers an auto rental collision damage waiver, trip cancellation/trip interruption insurance and a $100 airline fee credit, but you’ll also get these perks (and then some) from Chase Sapphire Reserve. Of course, for the premium cards, you have to make sure you use all the credits to actually get the higher value from them, but that shouldn’t be difficult if you’re a frequent traveler.

Extra benefits

In terms of extra benefits, the one unique thing that all three of the low-fee travel cards, the Chase Sapphire Preferred Card, the Capital One Venture Rewards Credit Card and the Citi / AAdvantage Platinum Select World Elite Mastercard, bring to the table is that they waive the annual fee for the first year, which makes them easy to try out. Other than that, the premium travel credit cards absolutely blow this category out of the water. That’s because every premium travel card comes with some form of airport lounge access that is worth several hundreds of dollars per year, like Chase Sapphire Reserve’s Priority Pass Select access. Additionally, The Platinum Card from American Express and the Chase Sapphire Reserve provide perks like room upgrades and free drinks at participating hotels around the world. The low-fee travel options are definitely great credit cards, but they don’t offer the multitude of small travel luxuries that the premium travel cards do.

Verdict

In many ways, premium travel credit cards definitely offer more rewards and perks than travel cards with lower annual fees. Those rewards are very much focused on travel, so you’ll need to be a frequent traveler in order to make the most of them, but even with the premium cards’ high annual fees, you’re still getting a good value as long as the card becomes the go-to card in your wallet. If you travel a lot and you’re operating with more than a shoestring budget, you should absolutely consider applying for a premium travel rewards credit card. On the other hand, if you only travel once or twice a year, but you still want to earn travel rewards, the low-fee travel credit cards still provide excellent value without the luxury benefits of the premium cards. Visit our reviews of the best travel rewards credit cards to learn more about the cards detailed in this post.

If you don’t think a travel rewards credit card would fit your life, be sure to check out our reviews of cash back credit cards. For more in-depth analysis of the newest card offers, you can follow our credit cards blog.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.