Why $450 Annual Fee Credit Cards Are NOT Just for Big Spenders

When I dove into learning about points and miles, I never dreamed of owning one of those flashy $450 a year credit cards.  Certainly those cards were for the wealthy people who might drop $450 on a meal for two.  Flash forward to today, and I have two such “premium credit cards.”  I have the relatively new Chase Sapphire Reserve and the recently enhanced American Express Business Platinum.  That’s $900 a year in fees.  Am I rich?  Uh, not even close.  So what caused my shift in philosophy?  There are many reasons.  Today, I’d like to show you why these cards can be sound investments, even if you only rarely travel.

The first thing to point out is that those annual fees are incredibly deceptive, like the MSRP on a car.  Sure, on paper, they add up to $900.  In truth, I only pay $400…combined.  I’ll get to that in a moment.  But even at $400 per year, given that I don’t travel that much.  So, what on earth am I getting from these cards that justifies those fees?

Your name doesn’t have to be Gates to justify these cards. Photo courtesy of Wikipedia



Let’s start with the Sapphire Reserve, my absolute favorite of the premium credit cards.  Why do I pay $450 for it?  Well, again, I don’t.  This card comes with an annual $300 travel credit per year, which can be applied to any travel.  So, my effective annual fee is only $150.  The other reasons?

  • It makes all of the points I earn from Chase cards worth a tremendous1.5 cents per point. These cards include the Freedom, Freedom Unlimited, Ink, and of course the Sapphire Reserve itself.  That’s simply tremendous value given how easy the points are to use.
  • A strong 3 points per dollar earned on dining and travel.
  • The ability to transfer my points into lots of other loyalty programs (United, Hyatt, Southwest, and others). By doing so, I can sometimes get even better than 1.5 cents per point in value.
  • I get an annual credit of $100 toward Global Entry or TSA Precheck. This makes traveling by air so much more pleasant as you can imagine.  Since both TSA Precheck and Global Entry are good for 5 years, I can use it for a different family member each year if necessary.
  • A Priority Pass membership that gets me and my family into hundreds of lounges around the world.  I should point out, however, that these are admittedly primarily in international terminals.
  • Primary collision coverage on rental cars. A huge perk if you need it.  If you have an accident in a rental car reserved with this card, there is no need to involve your insurance company.  Most cards offer only secondary coverage.

Sapphire Reserve

I don’t sleep with it under my pillow, but I do love this card.

To put the value proposition of this card in perspective, the Chase Sapphire Preferred comes with a $95 annual fee.  It only offers 2 points per dollar on dining and travel, does not come with lounge access, does not offer a TSA Precheck or Global Entry credit, and provides 1.25 cents per point on redemptions as opposed to 1.5 cents with the Reserve.  So, is all of that worth an extra $55 a year?  For me, it’s a no brainer “yes”.  I earn points faster through dining and travel, and those points become more valuable when I redeem them.  And I get perks like lounge access and TSA Precheck.  Score!


Now, if I have all of that from the Sapphire Reserve, why do I also need the AMEX Business Platinum?  Strictly speaking, I don’t need it, but AMEX recently changed an aspect of this card that quietly (too quietly in my opinion) caused my AMEX points to actually double in value overnight.  I’m not passing that opportunity up.  I’ll explain that change and explain why this card may be a better fit for you than the Sapphire Reserve.

If you’d rather wait for your flight here than at the gate, then these cards are for you.

I was never a big fan of the AMEX premium credit cards until fairly recently.  Sure, the Platinum cards offered you a $200 air travel credit to offset the $450 annual fee, but a) it had to be on your chosen airline (which you choose at the beginning of each year) and b) it was only applicable to fees (bags, flight changes, etc.), not actual airfare.  That means I am still paying a net of $250 per year, and the $200 credit is much harder to use than the Sapphire’s $300 credit.  Yuck.  Further, your points were only worth 1 cent per point toward airfare when you redeemed them. 


Late in 2016, however, AMEX made a big change (only to the Business Platinum).  You now receive a 50% rebate on points redeemed for airfare on your chosen airline.  So, big whoop, right?  Actually it’s a huge whoop.  It doubles the value of all of your AMEX Membership Reward points if you use them on your chosen airline.  So, while I would normally pay 10,000 points per $100 in flights booked through AMEX, this card means I get 5,000 of those points back.  So, the 100,000 points that used to be worth $1000 in flights are now worth $2,000.  That’s absolutely huge.  It’s only on my chosen airline, but it’s just plain enormous.

Incidentally, there are nine airlines you can choose from are.  Alaska, American, Delta, Frontier, Hawaiian, JetBlue, Southwest, Spirit, and United.  I chose Southwest, mainly because of their generous baggage and change fee policies.  Major warning: Southwest flights must be booked through AMEX Travel in order to pay with points.  Doing so incurs a booking charge of $39 per ticket!  

My newest card, whose $450 annual fee can be easily recouped and then some

So, the $200 credit takes my effective annual fee from $450 to $250.  How can I justify that?  Well, without the 50% rebate on points I mentioned above, I probably couldn’t justify having both cards.  But, here are some terrific perks the card offers:

  • Three flavors of lounge access: access to all AMEX Centurion lounges (regardless of who you are flying), Delta lounges (when actually flying Delta), and lounges around the world through Priority Pass. Centurion lounges are not in many places, but they are NICE.  The Sapphire is more generous on lounge access in terms of being able to bring people along for free.  AMEX wins, however, in terms of the number of available lounges domestically.
  • Gold status with Starwood and Hilton. Since Marriott and Starwood have a reciprocal relationship now, that also means gold status with Marriott.  This means much faster points earning with those chains, potential room upgrades, free breakfasts, and more.  Depending on your travel style, this perk can be huge.
  • Again, a $100 credit each year toward Global Entry or TSA precheck.
  • Fine Hotels and Resorts program – a very nice perk. Cardholders can book stays through AMEX at various luxury resorts and get perks such as a free third or fourth night, free breakfast for two, early checkins, late checkouts, and resort credits for spa visits or dining.
  • 10 free Go-Go Inflight internet access passes. If you fly fairly often, this can easily be worth $100 or more.  Note: this perk is for the Business Platinum only, not the Personal version.

The Peninsula Paris. A stay here through AMEX Fine Hotels and Resorts will provide free daily breakfast for two, a 100 euro resort credit, early check-in, and late checkout

So, are these perks alone worth $250 to me?  Probably not, but if I did not already have the Sapphire Reserve, I’d feel differently.  But again, the 50% rebate on points (on your chosen airline) should easily make this card pay for itself.  It’s just huge.


The other big player in this field of cards is the Citi Prestige, which I do not have.  Just a couple of years ago, this was the new big thing, and I almost pulled the trigger on it.  It has since lost some its panache for two reasons.  First, the Sapphire Reserve came along with a mammoth signup bonus, a much better (both easier and more flexible) travel credit, and more valuable points.  Second, the Prestige launched with benefits that could not be sustained, and it has lost some of those perks.  But it can still be a valuable card in some situations.  Here is an overview of the card’s features:

  • A $250 air travel credit (any airline, includes actual airfare), thus taking the effective annual fee from $450 to $200. This is better than the AMEX Platinum’s $200 credit, but it falls short of the Chase Sapphire Reserve’s $300 credit.
  • The biggest perk of the Prestige is that you get a free 4th night on every hotel stay of four nights or more. A single free hotel night can offset the remaining $200 in annual fees, and if you have a few four night or longer stays, this perk can be worth hundreds or thousands.  This feature alone is why some frequent travelers happily pay for this card each year.  Note: this does not cover hotel tax, and the free night savings is equal to the average rate of the stay.
  • Lounge access similar to the Sapphire Reserve through Priority Pass. It’s good, but not outstanding, especially domestically.
  • A solid 1.25 cents per point when redeemed for air travel through Citi.
  • 3 points per dollar earned on air and hotel travel. 2 points per dollar earned on dining and entertainment.

As I said, when this card arrived, it was a huge improvement over what was out there.  But the Sapphire Reserve shatters it in my opinion…unless you do lots of paid hotel stays of four more nights or longer.  In that case, the Prestige is capable of recouping hundreds or even thousands of dollars.


So, are any of these three cards for you?  For a serious business traveler, I feel any of them are easy to justify, especially the Platinum from AMEX as it gives Gold status to three different hotel chains and provides Global Entry or TSA precheck.

If you are not a frequent traveler, then I feel the Sapphire Reserve still can have a place in your wallet.  Its $300 travel credit takes almost no effort to recoup, and its remaining $150 effective annual fee gives a lot of great perks, even for not so frequent flyers.  Finally, its points are, in my opinion, the best out there.  if you already use the Freedom or Freedom Unlimited, the Sapphire Reserve makes their points more valuable as well.

For those of you who made it this far, I saved one last juicy fact.  You don’t have to commit to any of these cards long term.  Yes, they carry heavy annual fees, and none of those annual fees are waived the first year.   BUT, they all come with at least 40,000 points for signing up.  If you combine the value of those points with the travel credits, you still come out ahead.  So, you can apply, try the card(s) for a year, and then decide whether to keep it.  I never thought I’d pay for these cards, but I totally see the value now.  Perhaps you will as well.

So, what do you think?  Are these premium credit cards worth $450 per year?  Tell us in the comments section!

Hope you found this helpful.  If you enjoyed this article, please share it or email it so others can learn from it as well.  Let’s help as many people as we can!



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