If you are in the market for premium travel credit cards, be prepared to pay an even heavier annual fee.
On Thursday, American Express rolled out the latest version of the Platinum card. This costs between $695 and $895. Earlier this summer, JPMorgan Chase increased the annual fee for its Sapphire Reserve card to $795.
If that’s not the money you’re willing to let go, or if you know you can’t make the most of the perks of expensive cards, you may make low-travel reward cards more comfortable with a more modest fee.
But Brian Kelly, founder of Points Guy, should not be totally embarrassed about a fee-filled card. “There is no annual fee,” he says. “I really believe in the cheapest credit cards.”
When it comes to maximizing reward credit cards, what he says is the biggest mistake.
Go to the No-Fee route
Kelly doesn’t think he should pay just to pay it. But even those who took a casual approach to earn and redeem profits would think that their annual fees are worthy of low annual fees, he says.
“A card that doesn’t take once a year just doesn’t generally have a big reward,” he says. “For those who spend every amount, all the extra perks are worth it, along with double the (card) (card) for meals and travels.”
To choose the card that works for you, experts think about how you are already spending and say you will be drawn to cards that offer more points to the most popular categories such as travel, dining out, groceries, gas, and more.
Even if you already have a card you think will work for you, it’s important to check in to see how your spending and reward preferences have changed, Kelly says.
“In general, people don’t change their cards as their lifestyle changes,” he says. “When people have kids, when people travel too much, or they travel more or retire, they don’t switch credit cards to their lifestyle.”
Hot-up points
If you already have a reward card and you’re sitting in a lot of points, this may mean you need to switch to another card. Alternatively, if you are using a premium card, the fees are lower.
“If you’ve been struggling to use these points for years and you haven’t been redeemed recently, I think it’s a red flag,” Kelly says. “You should be able to say, this currency works for the way I redeem the points.”
For example, if you’re saving points until you hit a certain number or are enough to cover a gorgeous trip, you could be making a big mistake too, credit experts say. This is because the reward program allows you to freely change the value of points.
Bankrate senior industry analyst Ted Rothman told CNBC in February. “You don’t want to be a point billionaire. That’s not like 401(k).”
The negotiation fails
If you’re uncomfortable with your card’s annual fee, you can always downgrade to a cheaper card, but you don’t have to do so without asking the credit card issuer first to help you, Kelly says.
“When you’re on a fence, the first thing you want to do is do nothing,” he says. “I’ll call my credit card company and say I’m thinking of canceling.”
This may pass you through the retention department, but if that’s the person you should ask to speak to you, Kelly says. If you tell them you are thinking of canceling, they may sweeten the deal to keep your business going.
“In many cases, they offer discounts or points offers that make it a slam dunk for at least another year,” Kelly says. “And you can go back next year and reevaluate it.”
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