There are credit cards out there at all kinds of price points — there are some fantastic no annual fee cards, there are some rewarding mid-range cards (with annual fees of under $100), and then there are premium cards (with annual fees of $300+).
For many consumers, premium credit cards can be the hardest to justify, since many people just don’t think it’s worth spending hundreds of dollars per year on a single credit card. That’s fair enough, but I also think it’s worth discussing how we’ve seen a fundamental shift in the value of premium credit cards.
Going back a decade, premium credit cards had a pretty niche value proposition, and many people got these cards primarily for the prestige. However, the premium credit card space has become much more competitive in recent years, and this has caused the value proposition on these cards to improve considerably.
While premium credit cards aren’t for everyone, nowadays I’d say they’re pretty easy to justify for many people who like to travel. Yes, you’ll pay a high fee upfront, but the perks typically more than justify that. In this post I wanted to look at that in more detail.
Why premium credit cards are worth having
Let’s take a closer look at some of the most popular premium cards on the market. We’ll take a look at the annual fee, and then how I go about justifying the ongoing cost of holding onto these cards. I won’t even discuss the welcome offers, which can get you a ton of value upfront, and are all the more reasons to consider these cards.
Capital One Venture X Credit Card
The Capital One Venture X Rewards Credit Card (review) has a $395 annual fee, and is the newest premium personal credit card on the market. I also think it has the easiest to justify annual fee.
How do I justify the annual fee? The card offers a $300 annual travel credit (good as cash through the Capital One Travel portal) plus 10,000 anniversary bonus miles (I value Capital One miles at 1.7 cents each, so that’s $170 worth of value right there). By my math, you’re getting $470 worth of value on a $395 annual fee card with those two benefits alone.
But that’s only the tip of the iceberg:
As you can see, it’s really easy to make the math on the Capital One Venture X work, even if you’re not someone who would usually consider a premium credit card.
Chase Sapphire Reserve Card
The Chase Sapphire Reserve® Card (review) has a $550 annual fee, and is probably the most popular premium card with the younger generation.
On the most basic level, the card offers a $300 annual travel credit, which is automatically applied to any travel purchase. That should be good as cash to anyone who has this card, meaning this card should really only be costing you $250 per year.
What do you get for that $250 investment?
Independently I wouldn’t say the Chase Sapphire Reserve is quite as easy to justify as the Capital One Venture X, but the major benefit of this card is all the other cards you can maximize in the Ultimate Rewards ecosystem by having the Sapphire Reserve.
Amex Platinum Card
The Platinum Card® from American Express (review) has a $695 annual fee (Rates & Fees), so it’s the highest annual fee personal card of the bunch. Arguably the card set the standard for premium cards, though nowadays its value proposition can be pretty polarizing.
The card’s annual fee can potentially be more than justified by the incredible number of credits offered, including the following (enrollment required):
- Up to $300 in annual Equinox credits
- Up to $300 in SoulCycle credits
- Up to $240 in annual digital entertainment credits
- Up to $200 in annual hotel credits
- Up to $200 in annual airline fee credits
- Up to $200 in annual Uber credits
- Up to $189 in annual CLEAR credits
- Up to $155 in annual Walmart+ credits
- Up to $100 in annual Saks credits
As you can see, that’s potentially $1,800+ worth of annual credits. What’s the catch? These credits aren’t nearly as straightforward as the ones on Capital One and Chase cards. These credits are largely broken down by month, and come with lots of restrictions on what they can be redeemed for.
Some cardmembers will roughly breakeven on the annual fee with how they actually use these credits. Others may come out way ahead. Before you get the Amex Platinum Card, definitely do research on the terms associated with the credits, and how much value you’d get from them.
This is only one aspect of the card, though. The Amex Platinum Card also offers the most comprehensive airport lounge access of any credit card. You get a Priority Pass membership, access to Delta Sky Clubs (when flying Delta same day), Amex Centurion Lounge access, and much more.
Citi AAdvantage Executive Mastercard
The Citi® / AAdvantage® Executive World Elite Mastercard® (review) has a $450 annual fee. While it’s not as well-rounded as the other premium cards, I think it’s worth covering, as it offers one of my favorite credit card perks.
Most significantly, the card offers an American Admirals Club membership for the primary cardmember. That already represents a discount, as a membership would otherwise cost you a minimum of $550 per year if purchased directly from American.
But it gets much better than that. You can add up to 10 authorized users to the card at no extra cost, and they each receive Admirals Club access as well. Each authorized user is able to bring up to two guests or their immediate family into Admirals Clubs.
This means that your $450 annual fee card is really getting Admirals Club access for up to 11 people (along with their guests), which almost seems too good to be true. Again, it’s not for everyone, but if you’re an American Airlines frequent flyer, it’s a no-brainer.
There are credit cards at just about all price points. While many people have no issue picking up a no annual fee or sub-$100 annual fee card, premium credit cards with high annual fees are a different story.
I’m not saying everyone should pick up a credit card with a $300+ annual fee, though I do think the cards are easier to justify than most would assume. That’s especially true with a card like the Capital One Venture X, which offers annual credits and perks that more than justify the annual fee.
Cards like the Chase Sapphire Reserve aren’t slam dunks in quite the same way, but make a lot of sense for those who want to earn travel rewards, value lounge access, and appreciate travel protection when things go wrong.
The Amex Platinum Card has the potential to be the most rewarding of the bunch, despite the high annual fee. However, maximizing it requires a lot more research and effort than with the other cards.
What’s your take on the value proposition of premium credit cards? Which do you find to be worthwhile?
The following links will direct you to the rates and fees for mentioned American Express Cards. These include: The Platinum Card® from American Express (Rates & Fees).