What do avid travelers paying hundreds (if not thousands) of dollars in credit card annual fees and frequent Walmart shoppers have in common? They can both snag a free Whopper and a Burger King discount.
That reads like a punch line, but it's not a joke. It's the reality, part of a troubling trend we're seeing across many top travel credit cards: As they continually increase annual fees, banks are increasingly throwing in third-party statement credits … some of which have nothing to do with travel whatsoever. Think Uber Cash, Walmart+ memberships, retail shopping credits, and, yes, even fast-food discounts.
These aren't extra points or travel perks: They're digital coupons dressed up as value – coupons you have to use twice a year (or quarterly … or even monthly) to come out ahead on those higher annual fees.
The “couponization” (yes, that's a made up word) of travel cards is in full swing. And it's only getting worse.
What started with a few of Amex's flagship Membership Rewards-earning cards has now spread to nearly its entire lineup. At first, it seemed like a win: Paying a slightly higher fee in exchange for a couple of statement credits that more than offset the price hike. But what's followed is a plague of questionable “coupons” across all types of travel cards.
And while Amex is no doubt the worst offender, other credit card issuers like Citi and Chase have been making similar moves with their own recent card updates, raising annual fees and adding new credits (with plenty of hoops to jump through) in return. At this point, it seems like only a matter of time before Capital One and other banks join the race to the bottom.
So what's the logic behind all this? And when will it stop? Let's take a closer look.
How We Got Here
If you're one to point fingers, you can blame American Express for this mess.
It all started in earnest way back in 2018, when the bank unveiled a revamped *amex gold*. That ushered in a new $10 monthly dining credit, a relatively hard-to-use annual $100 airline credit (which is no longer available), and, of course, an increased annual fee.
*amex platinum* took things further coming out of the worst of the pandemic: Raising its annual fee to $695 per year (see rates & fees) and offering a hodgepodge of credits (Walmart+, Equinox, digital entertainment, etc.) totaling well over $1,500 in value on paper … that most cardholders never hope to use all of in practice – if any.
Over time, that playbook has spread to nearly Amex's entire lineup of cards. From its co-branded Hilton Honors and Delta SkyMiles cards to *biz platinum* and the *biz gold*, you'll find “money-saving” credits galore … many of which have nothing to do with travel or the brand associated with the card.
Take a look for yourself – here are the changes we've seen just within the past few years:
- Amex revamped the Hilton Honors American Express Aspire Card and the *Hilton Surpass* – upping the annual fees by as much as $100 while adding in new quarterly hotel and flight credits.
- Then, it was the Delta SkyMiles cards getting a facelift. As if limiting cardholders' Sky Club access wasn't enough, Amex raised annual fees across the board by as much as $100 in exchange for new annual hotel credits and monthly credits for rideshares and select restaurants.
- After initially escaping unscathed in the first round of Hilton card changes, the *hilton honors business card* got the same treatment: its annual fee doubled in return for quarterly hotel credits while an avenue to earn free night certificates was cut altogether.
- The beloved *amex gold* saw another “refresh” last summer, complete with more use-them-or-lose-them dining credits (including a laughable $7-a-month credit for Dunkin' coffees) in exchange for a 30% higher annual fee.
- Finally, Amex Business Platinum card added a new $50 quarterly Hilton credit of its own late last year, albeit without an increased annual fee. That still sits at a whopping $695 per year (see rates & fees) … for now.
Chase hasn't gone quite that far, but they've undoubtedly followed suit.
In early 2020, the bank added a new DoorDash DashPass and Instacart credit – which was replaced by an enhanced DoorDash benefit last summer – to its top-tier *chase sapphire reserve* and hiked the annual fee up to $550.
A couple of years ago, Citi revamped its top American Airlines co-branded card with new monthly rideshare and Grubhub dining credits … in exchange for a steeper $595 annual fee. The high-priced Citi Prestige is no longer available to new applicants, but before discontinuing the card, Citi toyed with similar lifestyle-focused credits.
Most recently, Chase unveiled its refreshed suite of United Airlines cards, complete with higher fees and new drips and drabs of credits for things like Instacart and Avis car rentals.
What's worse, you have to enroll (or opt-in) to receive many of these credits – it's not automatic. Forget to use your $5 monthly rideshare credit on *united explorer*? It won't roll over to the next month: That's money down the drain.
Managing a half-dozen monthly or quarterly credits one just one card is exhausting. If you have more than one of these travel cards in your wallet, you'll practically need a spreadsheet to keep track of it all … or do what the banks are hoping and not even bother…
Why Banks Are Doing This
It's simple, really: The banks are looking to generate more revenue through higher fees. But in order to do that, they need to increase the cards' value proposition.
A $50 or $100 increase in annual fees with nothing in return isn't going to give Amex, Chase, or Citi the results they're looking for. Existing cardholders would simply cancel their card. Generating new sign-ups would be an even harder sell.
Instead, they're leaning on new and expanded third-party partnerships to increase the cards' perceived value without adding much cost on their own ledgers. While we don't know for sure how much Amex is paying for the $10 or $15 of monthly Uber Cash it gives Amex Gold and Platinum cardholders, you can bet it's not face value.
Above all, the “use-them-or-lose-them” nature of these credits means many customers forget to redeem them altogether. It's called breakage: Unused benefits equals higher margins for the banks.
What do the likes of Uber, Equinox, or Walmart get in return? These credits are often part of a lucrative partnership that effectively turns the cards into a marketing ploy.
- If you have a “free” $10 to spend, you're more likely to choose Uber over Lyft.
- Walmart sees it as a way to steal some business from Target and Amazon.
- Or maybe you'll consider shopping at Saks because you have a semi-annual $50 credit on your Amex Platinum card to use – it's all about getting people in the door to spend well beyond the face value of the credit.
You might argue the shift to third-party credits dilutes the purpose of travel cards … and you'd be right. The irony? Many of these cards are marketed to high-spending, travel-savvy consumers – the exact people least likely to fuss over $5 to $15 credits for services they don’t already use.
When Will it End?
In a word (or two words): It won't. At least not until travelers start putting their money where their mouth is and cancel cards … or stop signing up.
No matter how much we bemoan these credits, they're a raging success for the banks' bottom line. Amex, in particular, is quick to note the benefits of these product refreshes on its quarterly earnings calls. Amex's own CEO has made clear it's only a matter of time before cardholders see more price hikes, saying: “The reality is, it'll go as high as the value allows us to go.”
So long as they're adding value – or perceived value, rather – I wouldn't expect this gravy train to run out of track anytime soon.
After all, annual fees only go one direction: Up. That means the best we can hope for is that travelers say enough is enough and stop the spread from getting any worse. If they don't, it's only a matter of time before we see one of these premium travel cards charging $1,000 (or more) per year.
Bottom Line
Banks have not-so-quietly transformed premium travel credit cards into digital coupon books – layering on random third-party credits like fast food discounts, Walmart+ memberships, and rideshare perks in order to justify rising annual fees.
What started with Amex has spread to banks like Chase and Citi. Unfortunately, Capital One may not be far behind.
These credits may increase the perceived value of a card, but for many travelers, they’re hard to use, easy to forget, and have little to do with travel. Until cardholders start walking away, this trend isn't slowing.
At this rate, $1,000-plus annual fees may soon become the norm.
