High-fee, premium credit cards give cardholders plenty of benefits, including lounge access, travel stipends and deals on flights and hotels, in some cases. But how do you know when a $500-plus annual price tag is worth it?
To figure it out, there are a few different calculations to take into account, according to CreditCards.com: The value of the benefits you’ve used, and the value of the benefits you’ll realistically use in the future.
Benefits You’ve Used
To figure out the value of the card benefits you’ve taken advantage of, “Review the card benefits on offer and compare them to those you have actually used in the past 12 months.” You can a quick Google search to get a sense of what they’re worth (you can find baggage fees for major airlines here), and then subtract that value from your annual fee.
For example, if you have the Chase Sapphire Reserve, you’re shelling out $450 per year. But if you’ve traveled, you may have taken advantage of the $300 annual travel credit, fee credit for Global Entry or TSA Precheck, lounge access, trip cancellation insurance, etc. The value of the $300 travel credit is, obviously, $300, while lounge access can cost $500 annually (though you can get less expensive day passes). But if you travel semi-frequently and take advantage of the lounges, you’re likely getting your money’s worth.
Benefits You Will Use
While the card may have been worth it this year, though, doesn’t mean it will be in the future. Look forward to your year ahead and make some assumptions about the benefits you’ll use.
As Stephanie Zito wrote for CreditCards.com, while she originally took advantage of the $450-per-year Citi AAdvantage Executive World Elite Mastercard, she no longer needs to rely on it for free baggage or other perks. “After flying American consistently, however, I actually earned a level of elite status that gave me even better benefits of priority boarding and complimentary checked baggage,” she writes. That means she can pocket that $450 and use it for something else.
On the other hand, you might not fly a single airline consistently enough or the lounge access might be worth it for you, particularly if you’re traveling with children and want a quiet place to rest and refresh.
Obviously, the key to getting the best value is to use the perks that you’re paying for—don’t let them expire at the end of the year.