Airline Credit Cards with an Annual Fee
When I first started dabbling in rewards travel, I thought credit cards’ annual fees were something to be avoided at all costs. If the annual fee was waived the first year, I would cancel the card when the next year’s fee hit. And I never even considered cards with annual fees not waived the first year.

Looking back, I regret a lot of my choices. I didn’t have a strategy and didn’t know about all the great benefits that came with some of these premium cards. Below, I’ll outline some of the lessons I learned so you can bypass learning the hard way.

In This Article

Why Annual Fees Aren’t Bad

Most travel rewards cards offer real value even after the first year. Don’t repeat my mistakes and automatically reject a card with an annual fee. Now, when I evaluate a card, I look at the expected value – I don’t want to break even, I want to be ahead.

For example, one of the benefits of the American Express Hilton Honors Surpass card is Hilton Honors Gold status. I would never chase any hotel or airline status, but I also won’t turn it down if it came as one of the card’s features. Hilton Gold status comes with my favorite benefit -free food, i.e. free breakfast for two people at all hotels. You can also match the Gold status to other program’s elite status, such as Wyndham Diamond.airline or hotel loyalty program

If your travel plans include traveling abroad, a card with no foreign transaction fees is a must. A premium card (a card with an annual fee) can save you a lot of money in foreign transaction fees.

Cards with high annual fees often come with generous airline or resort credits that help offset the fee. For example, the American Express Hilton Aspire card comes with a $250 resort credit. Just don’t get the MasterCard Black Card, because it offers no perks that justify its high fee.

The lounge access that comes with some high fee cards, such as the American Express Platinum or Chase Sapphire Reserve card, is an invaluable perk. I was sad to lose the Priority Pass restaurant benefit on my Business Platinum Card from American Express but, for now, I still consider it worth keeping for Centurion and Priority Pass lounge access.

Let’s look at some of the cards that have annual fees and are worth keeping long term. This is definitely not a complete list, and my goal here is to (hopefully) convince you that not all annual fees are bad.

Hotel Cards with an Annual Fee and a Free Night Benefit

I’ve mentioned already that some cards’ benefits far outweigh the annual fee. Hotel co-branded credit cards often come with a free night. I don’t see this as a completely free night, but rather a greatly discounted hotel stay. The free night awards come with their own limitations too, but a savvy traveler can get great value out of that free night.

Hilton Honors

The Hilton Honors American Express Surpass Card and Hilton Honors Business Card both have a $95 annual fee but come with healthy signup bonuses. They also come with complimentary Gold Status that gives you complimentary breakfast at all hotels. In my opinion, this is a valuable benefit, especially if you are staying at a resort or an expensive city where other food options are pricey.

Hilton Honors American Express Business Card

125,000 Hilton points after $3,000 spend in the first 3 months

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The Hilton Honors Aspire Card comes with Diamond status. In addition to free breakfast, you get executive lounge access. This is a great perk if you want to grab some coffee or water during the day and have a free drink in the evening. The annual $450 fee is steep, but can be offset with $250 airline fee credit and $250 Hilton Resort Statement Credit.

If you are planning on staying at a Hilton resort, the resort credit could come in quite handy and help cover the cost of meals and activities. The credit can be used at select Hilton resorts.

My favorite benefit is a free weekend night award. The award can be used at any Hilton property. Just think, you can stay at a resort that costs $1900 a night for free! There are also no resort fees or taxes when you redeem the free night!

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Between my husband and myself, we have a couple of those free nights and we plan on using them to stay at the newly opened SAii Lagoon Maldives, Curio Collection by Hilton in a few months. The rate for our dates in January is $750 plus tax.

SAii Lagoon Maldives, Curio Collection by Hilton
SAii Lagoon Maldives, Curio Collection by Hilton | Photo Courtesy of Hilton Resorts

World Of Hyatt

I’ll happily pay the $95 annual fee for the Chase World Of Hyatt Card because it comes with one free night at a category 1-4 hotels. Hotels in this category can include anything from Park Hyatt Saigon, a fabulous five star property in Vietnam, to a more basic Hyatt House or Hyatt Place hotels.

The World of Hyatt Credit Card

25,000 points after $3k spend in 3 months, another 25k points after $6k total spend in 6 months

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I don’t have to stay at fabulous resorts in the Maldives to get good value out of my Hyatt card. When we went to Florence in March during the peak spring break travel period, we had to stay one night in New York City. The very mediocre hotels near JFK and Laguardia were in the $200 range. I had no problems using the free night that came with the World of Hyatt card to book a stay at Hyatt Place Flushing. Taking the annual fee into account, I saved about $150 on that stay.

Want to see Tiger Woods play at The Masters? Augusta has two category 4 hotels that you can book with your free night award.

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Marriott Bonvoy

Marriott Bonvoy has a few co-branded cards offered by American Express and Chase. All cards have annual fees and come with one free night up to 35,000 points. The Marriott Bonvoy Brilliant card from Amex has a $450 annual fee, but the free night award is valid on nights up to 50,000 points. Even with the introduction of standard, peak and off peak pricing, there are still some great options to redeem the free night.

Marriott Bonvoy Brilliant American Express Card

75,000 bonus points after $3,000 spend in the first 3 months

Learn more by visiting our
credit cards page.

I used my free night to extend a stay booked with points at JW Marriott Dongdaemun Square in Seoul. The cash price at the time was about $250, so I got a good value out of the $95 dollar annual fee.

JW Marriott Dongdaemun Seoul
JW Marriott Dongdaemun Square in Seoul

Airline Credit Cards with an Annual Fee

This is definitely not a complete list of all airline credit cards that offer various benefits and make the annual fee worthwhile. In addition to free checked bags, co-branded airline cards come with priority or upgraded boarding, like the Chase Southwest Rapid Rewards Performance Business Card or United Explorer card.

Some airline co-branded cards, such as Platinum Delta SkyMiles Credit Card can help frequent flyers achieve elite status qualifications.

United opens up more domestic award space to its own elites or cardholders. I fly United a few times a year and usually check a bag, so I keep paying the annual fee on my Explorer card. I also like additional award space when I am using my United miles.

Southwest Rapid Rewards Performance Business Card

70,000 points after $5,000 spend in 3 months

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Cards that Earn Transferable points

Cards that earn transferable points, such as the Chase Ink Business Preferred or The Platinum Card from American Express, could also be worth what we pay in annual fees. They come with great benefits that make the cards valuable beyond the first year.

Check out our 10 reasons to get the Ink Preferred.

Initially, a lot of people balk at the $450 annual fee of the Chase Sapphire Reserve. But when you start digging into its benefits, you see that the annual fee is offset by a generous $300 travel credit. So its effective fee is actually $150. And even that might seem like a lot! However, the ability to redeem Ultimate Rewards points through the Chase travel portal at 1.5c/point, and many other benefits, makes paying its fee worth it.

Chase Sapphire Reserve

50,000 Chase Ultimate Rewards Points after you spend $4,000 spend in 3 months

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You’ll also need one premium card that earns Ultimate Rewards if you want to use them for travel.

The Chase Sapphire Preferred and Chase Sapphire Reserve offer trip interruption insurance. Recently, American Express announced that, starting in 2020, it will start offering trip interruption insurance on some of its cards. The benefits will vary by card, but it’s nice to see Amex adding value.

And let’s not forget the lounge access that comes with premium cards. The ability to take a shower after a long flight, or enjoy a snack or a meal on your layover, are two of my favorite benefits of high annual fee cards!

Final Thoughts

For someone just starting in this hobby, paying annual fees might seem like an unnecessary expense. I hope the examples I’ve included here make you at least pause and not dismiss these cards outright. Evaluate the benefits of each card and see if you are getting your money’s worth. Generally speaking, the more you travel, the more these fee-based cards can be worth to you.

For now, I have quite a few cards that have annual fees. I’ll keep paying them for as long as I can get more value from them than I pay in fees.

Travel well,

Anna

Chase Sapphire Preferred

New to the world of points and miles? The Chase Sapphire Preferred is the best card to start with. With a bonus of 60,000 points after $4,000 spend in the first 3 months and 2x points on dining and travel, this card truly cannot be beat! 

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About the Author

Anna is a freelance writer from Cleveland, OH who loves to travel and is a big miles and points geek. Anna’s favorite pastime (besides traveling) is planning trips and figuring out what kinds of points and miles she needs to make it happen. Thankfully, Anna’s husband is completely on board with all the free travel Anna earns and happily joins her on her adventures.

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6 Responses to “Don’t Fear the Annual Fees”


Great article, Anna!

Thank you for articulating both sides of this issue. I too, expect to come out ahead, rather than break even. But I also know better than to expect something for nothing. When that happens, it’s either a mistake, a consolation, or some internal employee is getting chewed out later (or worse). It’s fair to have some skin in the game, and then use what we learn to make the most of it.

I think some folks get caught up in the exhilaration of freebies. These kinds of articles show the smart way to approach this hobby – understanding what to think about in the long term vs. the short term, and learning how to use what best fits individual financial habits and scenarios.

Just been in the hobby as a 2 Player for about a year. Chase Sapphire Preferred just renewed at the beginning of October for both my wife and I. I understand keeping at least one intact to we can accumulate transfer all UR points to one account. We both have Chase Business cards as well with fees that will come due in the next few months. Should I just keep one CSP account open and try to downgrade the other? My wife already has the Chase Freedom – should I downgrade her CSP to maybe a Chase Slate?

Anna Zaks

Rob, you need just one premium card to be able to use UR for travel so it’s up to you which of your premium card/s you want to keep. Ink Preferred has cell phone insurance so that might be a consideration. There’s no point to downgrading to Slate, it has no benefits. You can have more than one Freedom though, so if you think you’ll be able to max out 5X categories on both cards, downgrade to Freedom. If not, Freedom Unlimited earns 1.5X on all purchases, so it’s a good option too. Some people upgrade CSP to CSR after the first year. The annual fee is higher of course, but it comes with Priority Pass and 1.5c/p redemptions through the portal. So something to think about.

Perfect timing on this article as I’ve been thinking if paying all the annual fees are worth the expense for us. Due to job loss than new jobs we might not be traveling as much plus we have 2 timeshares to use. We do live an hour away from a major city so we have used the free night cert’s for a night away. Need to evaluate.


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