Luxury vs. Utility: Evaluating Premium Travel Credit Card Fees in Today’s Shaky Economy | Credit Cards

The economy has been called K-shaped, E-shaped and possibly other letters, but one thing is for certain: The economy is shaky, and consumers are feeling it.

With 56% of Americans using their credit cards to cover basic necessities, shelling out anywhere between $400 and $900 for an annual fee is becoming harder to justify. So you have to ask yourself, is a premium card worth it right now?

There are multiple types of travel cards: general, airline and hotel. If you value flexibility over loyalty, then a general travel rewards card is worth more. But if you prefer a certain airline or hotel chain and value elite status, then a co-branded airline or hotel card fits your needs better.

Keeping that in mind, it’s important to consider what will provide you the most return on investment, or ROI, on a credit card that charges a high annual fee.

If you prefer flexibility with your travel card, it’s vital to consider an issuer’s full list of transfer partners. It’s the best way to achieve perks like free hotel nights or elite status without having to sign up for a co-branded credit card. Popular rewards-earning programs like Chase Ultimate Rewards, American Express Membership Rewards and Capital One Miles have a plethora of transfer partners.

With annual fees quickly approaching the $1,000 threshold, what the cards can provide you in return is more important than ever. In our most recent summer travel survey, we found that a majority of consumers value benefits such as free hotel nights (52%), free checked bags (45%) and upgraded hotel or airline status (32%).

So when ticking off the boxes of required travel benefits, consider perks you’d otherwise pay for like:

Becoming more common with premium credit cards, these statement credits (or coupon books, depending on whom you ask) encourage you to spend at certain businesses and on certain products. But they don’t make sense if you have to go out of your way.

For example, the American Express Platinum Card® comes with a $300 Equinox credit, but if you don’t live near an Equinox or prefer a different gym, you’re essentially out that $300 (Enrollment Required). The same goes for other offered credits like the $200 Oura ring credit or $155 Walmart+ credit (Enrollment Required). Find a card that doesn’t make you spend extra or go out of your way to earn a perceived perk.

These are just some of the most popular premium travel credit cards. As you can see, annual fees range from just under $400 to close to $1,000. Normally, you receive the best and most benefits with a high annual fee. But making sure that annual fee is worth it will require some research.

Let’s say you value perks like airport lounge access and TSA PreCheck. Daily passes for airport lounges typically cost between $50 to $100, and TSA PreCheck enrollment costs about $80 every five years (an annual cost of $16).

If you travel only two times a year but use TSA PreCheck and also check in to an airport lounge every time, your out-of-pocket costs every year for those two benefits would be between $216 and $416 – which is less than most of the annual fees listed above.

This means you have to find the missing value in other ways, such as elite status and statement and travel credits. This is why premium travel cards only make sense for the frequent traveler who can use multiple provided benefits at once.

A premium travel card could be worth it if you:

Consider skipping a premium travel card if you:

If you’re realizing a premium travel rewards credit card isn’t worth it in today’s economy, consider these alternatives: