What Over $2,000 in Annual Fees has Earned Us This Year

When I first started signing up for credit cards to get crazy cheap flights and hotels, my primary goal was risk aversion.  Despite plenty of research on the process, there are still a lot of unknowns signing up for that first card simply because I’ve never gone through the process before.  Overall, the risks are minimal if you trust yourself to be responsible with credit, but without having ever redeemed a point or mile for travel before, I thought it was best to be conservative.

For that reason, the one thing I avoided like the plague in the first 6 months to a year were annual fees.  Why pay anything up front for an unknown future benefit?  Luckily, the banks are aware of this hesitation to sign up for new credit cards and many offer products that waive the annual fee completely for the first year (not to mention all of the cards that don’t have an annual fee to start with).  These types of cards gave us plenty of opportunities to get our feet wet with new credit cards, earn a variety of points, and start redeeming for ultra cheap travel.

Over time, we became much more comfortable with the process and earned the knowledge and experience necessary to maximize the benefits of all the different miles, points, and credit card benefits that came with each new application.  That was when we stopped fearing the annual fee and had no problem paying a bit up front or over time if we knew that we could get way more than that cost back in value.

Adding up the totals as we get towards the end of the year, it looks like we’ve paid just north of $2,000 in credit card annual fees this year alone, but have gotten far more than that back in benefits.  I’ll break down all of the fees we’ve paid below and why I think the benefits have far outweighed that cost.

credit_cards

First, The Hotel Cards with a Free Night

  • Chase IHG card – $49 annual fee (x2)
  • Chase Hyatt card – $75 annual fee (x2)

Becky and I each have a copy of the Hyatt and IHG cards offered by Chase.  Both cards waived the annual fee for the first year, but offer a great incentive to pay the annual fee going forward, free hotel nights!  Now they aren’t really free because you’re paying an annual fee, so it’s probably more accurate to call them “pre-paid, discount” hotel nights.

The IHG card probably has the best free night offered by any card as an anniversary bonus because there aren’t any category restrictions.  That means for the $49 annual fee, we could stay in an Intercontinental property that would normally cost hundreds of dollars per night!  When we stayed in the Intercontinental New York last year with IHG nights from a promotion, the rate on their website was $449 per night.  We would probably never pay cash for that room, but it would be a great use of a free night obtained for the $49 annual fee.  Another benefit of the IHG card is getting 10% back on all award nights which helps stretch our IHG points a little further.

For Hyatt, the anniversary bonus for paying the annual fee is also a “free” hotel night, but in this case it is restricted to hotels from category 1 through 4 in the Hyatt program.  While this does exclude Hyatt hotels in the highest 3 tiers, there are still plenty of hotels that are well worth the $75 “pre-paid” rate in the lower 4 tiers.  Examples include several hotels on the Vegas Strip, many properties that can found in large city centers like Seattle, and even a Grand Hyatt located in Costa Rica.  We’ll probably end up using them on one of our domestic trips next year, but who knows where we’ll end up.

  • Total spent on “pre-paid” hotel night annual fees: $248

Next, The Big Luxury Credit Cards

  • Amex Platinum card – $450 annual fee
  • Chase Sapphire Reserve – $450 annual fee (x2)

These are the cards I couldn’t imagine being worth an up-front cost of $450 when I first started in the churning hobby, but it didn’t take long for me to realize the potential if you maximize the benefits.  This is especially true when they come with a large signup bonus like the 3 we applied for this year did.  Each came with a 100,000 point initial bonus that is worth at least $1,000, often much more.

For the Platinum card, we signed up during a leaked 100k point offer back in May of this year.  In addition to the 100,000 Membership Rewards, the card also comes with a $200 airline credit each year which we can use twice before the annual fee is due again.  In our case, we tend to choose United as our carrier and buy gift cards (like Amazon) through their MPX app in order to “cash out” the $200 credit each time.  I’d recommend double checking the latest data points before trying yourself, but there isn’t much risk if it doesn’t work.

As we already both have Global Entry and no family members have taken me up on the offer to pay for theirs, I’m not sure if we’ll be able to use the $100 credit this time around.  Other benefits on the Platinum we’ve taken advantage of include lounge access (in particular the Centurion Studio in Seatac many times) and free elite status with Hilton and SPG (Gold for each) which provide marginal benefits when we stay at those properties.

The Sapphire Reserve card is the hottest thing to hit the credit card world in quite a while and we were each fortunate to get access to it despite being above Chase’s standard 5 cards in the past 24 months rule (5/24).  I applied for mine when the application leaked online a few days before it was supposed to and Becky was able to get pre-approval in branch when opening a bank account.  Each card came with 100,000 Ultimate Rewards points which can be cashed out for $1,000, used for $1,500 in travel, or possibly even more if transferred to partners.

In addition to that, it also comes with a $300 annual travel credit that can be used for pretty much any travel.  We mostly used it for airline award booking taxes/fees and uber this year, but we’ll be able to get another $600 next year between the two cards before the annual fee comes up again!  This card also comes with airport lounge access (unlimited guests!) and a $100 Global Entry credit which we may or may not be able to use.

Despite the high annual fees, you might be able to see why these cards and their large signup bonuses are highly sought after in the miles and points world.

To sum up, for $1,350 in annual fees we were able to get 300,000 points (worth over $3,000), $800 in travel credits this year, and another $800 in credits we’ll be able to use in January.  That’s not even including all the additional benefits that the cards provide on top!

  • Total spent on Luxury Credit Card annual fees – $1,350

Then, The Keeper Cards

  • Amex Blue Cash Preferred annual fee – $75
  • Amex Starwood Preferred Guest Business Card annual fee – $95

First (and maybe most importantly), these are both Amex cards which means they are eligible for Amex Offers.  By taking advantage of the various Amex Offers throughout the year, specifically for reselling gift cards, it’s possible to profit well beyond the annual fee of each of these cards yearly.  Don’t forget that for one annual fee, you can add multiple authorized users for free that can also take advantage of the same Amex Offers!  Want to know more?  I recently did a write up on some of the recent profitable Amex Offers and how to take advantage of them: ‘Tis the Season for Amex Offers.

Ignoring the Amex Offers themselves, there are specific reasons I kept both of these cards and was fine paying the annual fee.  The Blue Cash Preferred (BCP) offers 6% back at grocery stores up to $6,000 each year.  We tend to spend around that amount annually and any amount we fall short can be used for gift card promotions that our local stores often have.  After the annual fee is taken out, it’s really only an effective 4.75% back on the grocery spend, but this still works out better than the no annual fee version that only offers 3% back.

Lately, I’ve noticed myself becoming a little lazy when it comes to signing up for new cards and I seem to have settled for 5% on everyday spend as “good enough”.  I’ll have to explore whether or not this is a good decision in a later post, but the BCP definitely makes it easy for a good chunk of our normal spend.

For the SPG business card, I kept it because it’s currently the best card for me to put spend on if our goal is getting the Southwest Companion Pass next year.  Don’t see the connection?  Check out my recent post on earning the Southwest Companion Pass with hotel points:  Earning the Southwest Companion Pass Beyond 5/24.

I still haven’t decided for sure if we’re going to earn the companion pass by transferring a bunch of points early next year, but either way, SPG points tend to have good value regardless (they funded a good chunk of our honeymoon for example).  Either way, I’m confident I’ll make back the annual fee in Amex Offer gift card flips and the lounge access benefit at Sheraton hotels is a bonus on top.

  • Total spent on “Keeper” Amex cards – $170

Finally, the Cards That Don’t Waive the Annual Fee

  • Bank of America Alaska Airlines card – $75 (x2)
  • Amex Hilton HHonors Surpass card – $75
  • Citi AT&T Access More card – $95

While most of the cards above had some ongoing benefit that made the cards worth keeping, these particular annual fees were simply the price of getting the signup bonus.  Many cards offer large signup bonuses AND waive the annual fee, but cards like these make you pay the fee up front.  That just means you have to make sure the signup bonus and any benefits in the first year are worth the cost.  In our case, we thought each of these made sense for us.

Each Alaska Arilines card came with a large amount of Alaska miles (25k and 30k) in addition to a $100 signup bonus.  That means that after meeting the minimum spend, you’ve profited $25 and earned a bunch of miles!  Definitely a good offer if you have a use for Alaska miles (we’ve found a lot of good uses) and each card also comes with a companion fare that is good for buy one, get one for ~$119 on any Alaska flight.  We haven’t used them ourselves, but I have gifted several to friends and family which has saved them hundreds of dollars as well.

For the Amex Hilton Surpass card, I decided to apply when the signup bonus went up to 100,000 Hilton points.  Now these aren’t worth anywhere near as much as the Chase and Amex points we discussed above, but should still amount to $400-600 worth of hotel nights for us.  Don’t forget about the Amex Offer benefit here as well, but there’s not much else to mention about this card other than it also comes with Hilton Gold status.

Finally, we have the Citi AT&T Access More card.  Becky applied for this not long before all of the applications disappeared completely (otherwise I would have gotten my own copy!).  The card came with a $650 credit towards any phone purchased from AT&T which we had no problem using when we upgraded our phones this year.  This card also has the ongoing benefit of 3x back on all online purchases, which can be quite lucrative in the right circumstances.  Regardless, we got a net $545 from the signup bonus which is definitely on the higher end of the non-luxury cards available.

  • Total spent on new cards that didn’t waive the annual fee – $320

Summing It All Up

The title might have been a shocker if you’re not involved in the travel hacking game, but if you followed along, you’ll hopefully agree that we came out ahead.  Between large signup bonuses, hotel nights, travel credits, and more, I’d be happy to pay the annual fees again if I got the chance.

Total Spent:

  • Total spent on “pre-paid” hotel night annual fees: $248
  • Total spent on Luxury Credit Card annual fees – $1,350
  • Total spent on “Keeper” Amex cards – $170
  • Total spent on new cards that didn’t waive the annual fee – $320
  • Total spent on annual fees in 2016 – $2,088

Total Benefits:

  • 4 “Free” Hotel Nights
  • 300,000 in bank points (worth over $3,000)
  • $800 in “travel” credits in 2016
  • An additional $800 in “travel” credits for 2017
  • 155,000 in hotel/airline points
  • $850 in signup bonus statement credits
  • Lounge access, hotel status, bonus spending categories, etc., etc.

Looking at the statement credits alone (travel and otherwise), $2,450 went back into our pocket as cash which covered all the annual fees and then some.  The almost half a million points and free hotel nights were just a bonus on top to go with some of the auxiliary benefits that comes with many of these cards!

This post was spurred when I was going through some of our finances for the year and saw the huge $2,000 line item for credit card annual fees.  It can be a bit shocking on it’s own, but I only had to glance down a little further to see that we’ve brought in more than $3,000 in cash benefits from the cards above and more in the same time span, not to mention all of the points and other benefits that come on top.

I guess the lesson (if there is any) is to not have sticker shock when you see a high annual fee on a new credit card.  Take a breath and crunch the numbers to see if the signup bonus and benefits might outweigh the up-front cost.  Who knows, that $450 annual fee card might be the most valuable one you’ve ever gotten (*cough* the CSR *cough*)!

Cheers and happy churning!


Travel Rewards Credit Cards

20 thoughts on “What Over $2,000 in Annual Fees has Earned Us This Year

    1. Did you get to the part where I explained the $2,450 back in cash? Even if we did absolutely zero travel, we’d still be coming out ahead. Especially considering most of the points earned can be cashed out for an additional $3,000+ in cash if we have no interest in using them for travel.

      Having said that, our strategy would be much different if we didn’t travel as much, but a lot of the cards above would probably stay the same.

      1. “Did you get to the part where I explained the $2,450 back in cash? Even if we did absolutely zero travel, we’d still be coming out ahead.”

        Um, $1,600 of that “cash back” is in travel credits and is split over two years. So if you did absolutely zero travel in those two years, you’d be down to the $850 in cash back in sign-up bonuses.

        1. The “travel” credits can be turned into cash with minimal effort (no travel required) and you can’t exclude the value of the 400k+ points as well in this travel-less scenario.

          I guess my only point is that we’re positive cash from just credit card stuff above before taking into account any travel. Ben seemed to be implying that we were sinking (or pre-paying) a minimum of $2k of our travel budget right off the bat when that simply isn’t the case.

        2. As Noah pointed out, travel credits are as good as cash these days. At worst, you can buy qualifying giftcards and resell them for 80% (against worst case number) so $1280 cash. Those giftcards can be e-giftcards so you can do this all from the comfort of your home in a few minutes.

          Plus, 300k points can be redeemed for 1 cent per point directly toward your statement so it’s literally $3,000 cash if you choose to use it that way.

          Lastly, I’d venture that someone with zero plans to travel would not have necessarily gone after a lot of these cards.

  1. Noah, a good read.

    I don’t have those 450 AF card, never paid 1 in my my life. Other than I we’re all similar path. I’m hold the CSP instead of the CSR. Speaking of which, I need to do chaserecon, i’m right at 5/24.

    1. Thanks for reading, I think we’ll always have at least one of the high annual fee cards between us for the lounge access. Makes travel much more enjoyable for us.

  2. Agreed, the annual fees are definitely worth it. They’re not as high as they seem when you net out the travel benefits that you described in detail. On the Sapphire Reserve, my firm reimburses me for late night Uber rides home for the office, so it was pretty easy to max out the $300 in travel rewards within a month.

    1. That uber benefit sounds pretty awesome (but I guess having to work late cancels most of that out?), I hope you’re getting SPG points for all of those uber trips as well.

  3. I loved this post. And I completely agree. I earned almost $1,000 in Amex sync offer rebates on my platinum card alone this year. All in buying items I would have bought anyway (pet food, AT&T payments, target gift cards, etc.). I am slowly changing my opinion on paying the AF for cards and rethinking my prior belief to avoid all AFs.

  4. Nice post, thank you for being upfront with your readers and giving a good overview of your AF Cards. Keep on posting, you are great at it! Consider alternating years with Becky on Amex Plat Ameriprise card, first year is free, same benefits as your $450 fee gets you. Just an idea, save $$ next year.

    Cheers,

    PedroNY

    1. Thanks for reading!

      The only reason we paid the annual fee for the Amex Platinum was because of the 100k signup bonus. We’ve gotten the Ameriprise version before and we’ll probably do it again once this most recent one gets close to the one year mark. It’s hard to beat that waived annual fee (for AUs too!) for the first year if you can maximize the benefits.

    2. @PedroNY. This is exactly what I am doing now with Ameriprise plat. Got $200 travel credit this year, next month get another$200. Added my daughters as au’s and they each got Global entry covered -$100 ea. Each card got Priority pass, Gold Hilton and Gold SPG which gives you Marriott Gold(breakfast/lounge). The priority pass was very useful this past fall city hopping all over China for a month although some lounges were not very good but still better than sitting at the gate.
      When af is due, will cancel and have wife get it.
      Since there was no sign up bonus, just straight points earning, this is a card I got for the benefits and not the bonus. Only bonus is 5x on airline ticks and a 5k bonus when 20k is spent in a transaction.

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