Do the Math, Don't Rule Out Credit Cards with Big Annual Fees
chase sapphire reserve

Do the Math, Don’t Rule Out Cards with Big Annual Fees

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That old phrase “The best things in life are free” doesn’t apply to travel rewards cards. Sure, it’d be great if you could travel the world with no annual fee credit cards – no one likes to spend their money on fees. But the real value in travel rewards cards usually comes with a price tag, and sometimes a big one.

The combination of huge points bonuses, travel perks like lounge access or free Global Entry, $300 or more in travel credits and major point earning possibilities can more than offset a big annual fee. That’s definitely the case with cards like the Chase Sapphire Reserve, which we’ve named our #1 overall rewards card despite its $450 annual fee.

These pricey cards definitely aren’t for everyone – and certainly not for someone who doesn’t travel often. But in this post, we hope to show you that you shouldn’t rule out cards with annual fees before you do the math for yourself. You may find that the benefits far outweigh the cost.


Instant Discount Through Travel Credits

The Chase Sapphire Reserve’s $450 annual fee is misleading. It’s actually more like $150. That’s because the card comes with a $300 annual credit that applies automatically to any travel purchase. Whether it’s a plane ticket, Uber ride, hotel reservation or more, any purchase coded as travel qualifies. This travel credit is among the most flexible and lucrative in the points and miles world.

You get similar kickbacks with the American Express Platinum Card, which comes with a $550 annual fee. You can apply $200 toward travel fees like baggage and seat assignment, and another $200 to Uber rides over the course of a year.

Needless to say, you won’t find these benefits on a no-annual-fee card, or even a more modestly priced card. So while an annual fee of $450 or more may give you sticker shock, you have to factor this immediate discount in.

Net Annual Fee: $150


Lounge Access and More

Even an occasional traveler can squeeze hundreds of dollars in extra value out of a big-fee card. It starts with credits that cover Global Entry or TSA PreCheck registration. These programs are your pass to skip the long lines at airport security and immigration. You get this perk with top-dollar cards like the Chase Sapphire Reserve and American Express Platinum as well as some cheaper cards, including one no annual fee card.

Seeing as a Global Entry membership costs $100 for five years, your effective annual fee on a card like the Chase Sapphire Reserve or American Express Platinum card is getting even lower.

Thrifty Tip: Read our guide on Global Entry vs PreCheck to decide which program makes the most sense for you.

Net Annual Fee: $50 your first year.

It gets better. Top-dollar cards come with access to airport lounges, making your time in transit more comfortable. Even the most basic lounges offer free snacks and drinks, while some international lounges are truly luxurious.


Chase Sapphire Reserve Annual Fee
You can get into fancy lounges like the El Dorado Lounge at Bogota International Airport for free with cards like the Chase Sapphire Reserve.


The Chase Sapphire Reserve card comes with a Priority Pass membership that gets you into more than 1,000 lounges across the globe and a number of airport restaurants. The American Express Platinum card goes even farther: You get Priority Pass access, entry into Delta SkyClubs and can even use Centurion Lounges worldwide.

Only you can decide how much lounge access is worth to you based on your travel habits. At this point, it’s fair to say that once expensive-looking card may have paid for itself. And that’s before you’ve earned a single point for travel!

Net Annual Fee: $0


Big Bonuses & Enhanced Earning

The combination of a big upfront points bonus and the ability to rack up more is formidable. And It’s something you generally won’t find with a more inexpensive or free card.

The Chase Sapphire Reserve comes with a 50,000 point bonus after spending $4,000 in three months. And because it’s Chase’s top card, those points are worth 1.5 cents each – not just 1 cent – when redeeming travel through the Chase Ultimate Rewards portal. That means you get $750 towards travel. Smart use of Chase’s airline transfer partners could unlock even more free travel.

It can get even bigger with the American Express Platinum card. The standard bonus is 60,000 American Express Membership Rewards points after spending $5,000 in three months. But you might be eligible for a whopping 100,000-point bonus via CardMatch. It’s one of the biggest bonuses you’ll find in the world of points and miles.

The value doesn’t stop with the big bonus. The Chase Sapphire Reserve gets you 3x points on any travel or dining purchase. The American Express Platinum card’s spending bonus is limited to travel but it’s much larger: 5x points per $1. You simply won’t get that kind of return on spending from a no- or low-annual fee card.

It’s difficult to quantify how much this offsets a big annual fee, as it depends upon your spending and how you redeem your bonus in your first year with the card. But needless to say, this just sweetens the deal.

Net Annual Fee: $0


Bottom Line

Many travelers write off credit cards with annual fees, and we understand why. Whether the annual fee is $95 or $550, you have to add up the benefits of holding a card to see if they outweigh that cost. For some, an expensive card will never make sense. But for many, even a top-of-the-line card is worth far more than the big annual fee.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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