Evaluating Travel Credit Cards Amid Rising Fees
As annual fees for travel credit cards increase and benefits change, it’s essential to re-evaluate the value these cards provide. Understanding whether a travel credit card is worth keeping can significantly impact your overall travel expenses.
The Impact of Annual Fees
Recent increases in annual fees for popular travel credit cards highlight the importance of assessing their value. For example, the Chase Sapphire Reserve card’s annual fee surged from $550 to $795—a notable 45% increase. Such hikes prompt travelers to reconsider whether the card still meets their needs.
Industry experts agree that annual fees can be justifiable if the benefits outweigh the costs. Ted Rossman, an analyst from Bankrate, points out that while annual fees are not inherently bad, maximizing the card’s benefits is becoming increasingly challenging.
Evaluating Interest Rates
One crucial aspect to consider is the interest rates associated with these cards. Carrying a balance can negate the rewards and benefits, as high-interest rates often apply. With average annual percentage rates hovering around 20.13%, premium travel cards can range from 25% to 30%. Travel expert Sally French emphasizes that debt can quickly diminish any potential rewards, making it vital to pay off balances regularly.
Choosing Card Types: General vs. Brand-Specific
When selecting a travel credit card, you’ll encounter two main types: co-branded and general travel cards. Co-branded cards are tied to specific airlines, hotels, or travel brands. If you frequently fly with a particular airline or stay at a specific hotel chain, a co-branded card might be beneficial. These cards often offer perks such as free checked baggage and priority boarding, but they typically only apply to the associated brand.
In contrast, general travel cards provide flexibility, allowing travelers to earn and redeem rewards across a wider range of options. They can offer similar benefits, including travel credits and sign-up bonuses, but may come with an annual fee ranging from $95 to over $500.
Assessing Card Benefits
When evaluating a travel credit card, it’s crucial to review its perks in detail. Some cards may charge a fee but include valuable benefits, such as free checked luggage for multiple guests. For families planning to travel, even a single perk could make a card worthwhile if it offsets the costs of travel.
Both types of travel credit cards generally share core benefits. For instance, they often provide credits for programs like TSA PreCheck and substantial sign-up bonuses for meeting initial spending thresholds. Travelers who frequently utilize these services might find that the benefits outweigh the costs, making the card a smart choice.
Identifying Your Travel Needs
Before committing to a travel credit card, consider your travel habits and lifestyle. Frequent travelers who stick to specific airlines or hotel chains may find co-branded cards advantageous. However, if you travel only occasionally, a no-annual-fee travel card may suffice, as paying an annual fee for unused benefits can lead to unnecessary costs.
If you currently hold a card with a high annual fee but aren’t utilizing its benefits, downgrading to a lower-fee or no-fee card offered by the same issuer can be a smarter move. This approach can help maintain your credit score better than canceling the card altogether.
Conclusion
With the evolving landscape of travel credit cards, it’s important to regularly assess whether they align with your travel patterns and financial goals. By taking the time to evaluate whether the benefits justify the costs, you can ensure that your travel credit card remains a valuable asset for your adventures.
