Several weeks ago I wrote that the New Chase Sapphire Reserve credit card is the best card for free travel with great perks. Indeed, the Internet has been abuzz with excitement for this anywhere that travel aficionados congregate. Then, last week, I reported on the superb Centurion Lounge experience courtesy of the American Express Platinum Card. All these great travel perks beg two questions: Does it make good cost-benefit sense for you to get one of the big three premium credit cards, and if so, which one is right for you?
I will be the first to acknowledge that you're not in the target audience for today's post (or this little mini-series we've been doing the last several Fridays) if you don't love to travel, or if you straight up are not interested in paying some extra dollars each year (in the form of an annual fee) for an elevated travel experience. Assuming that the former doesn't apply to you, you might find that the latter doesn't require nearly as many extra dollars as you imagined.
One way to evaluate cost-benefit is to look at how many points you earn when you make purchases on the card. Points are a little abstract for most consumers, though, so I use a measure I call "Value Per Hundred" (VPH) which basically tells you how many dollars to put towards travel you get per hundred dollars spent on the card. It helps me compare apples to apples.
Side-by-Side review of Chase Sapphire, AMEX Platinum, and Citi Prestige
The Citi Prestige Card, Chase Sapphire Reserve, and American Express Platinum Card each carry a terrifying $450 annual fee. But the truth is that each card credits you so much back each year in statement credit that users actually end up forking over between $150 and $250 per year in order to enjoy all the benefits. So our first question, "does it make good cost-benefit sense for you to get one", really boils down to whether the Real Cost is worth the benefits, not whether $450 is worth the benefits. That's a choice for you to make.
Chase Sapphire Reserve
Real Cost: $150 ($450 annual fee - $300 statement credits each year refunded for any travel purchases).
Benefit Highlights: Earn $4.50 towards travel for every $100 you spend on any and all travel (airfare, cruises, rental cars, trains, hotels, and -- yes -- Uber), and $1.50 towards travel for every $100 you spend on literally anything else. Also, get reimbursed up to $100 when you enroll in TSA PreCheck, access over 900 airport lounges worldwide (including at about 25 domestic US airports) with a free membership to Priority Pass Select, never pay foreign transaction fees, and enjoy "Purchase Protection" that covers your new purchases for 120 days against damage or theft up to $10,000 per claim and $50,000 per year. Also, if you spent $4000 in the first three months of opening your account, you'll get 100,000 bonus points that are worth $1,500 to use towards travel (it's basically free money). You can find more Chase Sapphire Reserve benefits here.
Who it's Good for: Travelers who dine out often and who value earning points towards free travel above all else, for the Chase UltimateRewards system is far superior to those of American Express and Citi. Also, anyone who wants to feel like a boss because the card is made of metal (except for that it has been so popular since launching in late August that Chase ran out of metal cards, and is shipping out typical plastic cards until it can fabricate new metal versions, at which time they will ship you a replacement).
American Express Platinum Card
Real Cost: $250 ($450 annual fee - $200 statement credits each year refunded for travel fees such as baggage or in-flight meals)
Benefit Highlights: At $1.00 earning per every $100 spent, regardless of what you spend it on, the AMEX Platinum is by far the worst of the three for earning and redemption. Platinum's real value is that it allows you access to the amazing Centurion Lounges that AMEX operates at Dallas, Houston, Las Vegas, New York - La Guardia, Miami, Seattle (I understand a bit smaller than the others), and San Francisco airports, access to all of the Delta SkyClubs when traveling that same day on Delta Airlines, and of course the Priority Pass Select lounges. Members also get automatic Hilton HHonors Gold Status -- a benefit that I think is nice, though I've never been able to assess the real value of it (i.e. it's a nice to have, not a big deal). Similar rules on TSA PreCheck rebate and foreign transaction fees apply here as they do on the Chase Sapphire Reserve, and those who spend $3,000 in the first three months of opening their account will get 40,000 Membership Rewards points that are worth $400 on travel (again, free money, but not nearly as valuable as the competition). If you have the ability to get the American Express Business Platinum, do it, because you'll enjoy similar(ish) benefits as to the standard edition, but you'll also get 10 GoGo inflight WiFi passes each year. The $100 value of those passes reduces your annual real cost to $150. You can find more American Express Platinum (standard edition, not Business) benefits here.
Who it's Good for: Travelers who value their use of airport lounges above all else.
Citi Prestige Card
Real Cost: $200 ($450 annual fee - $250 statement credits each year refunded for air travel expenses such as baggage or airfare)
Benefit Highlights: The value per hundred here is a bit of a mess right now given the benefits that Citi is currently in the processing downgrading, so I'll try to break it down for you. Until July of 2017, you'll get $4.80 of travel an American Airlines per $100 spent on air travel and hotels, $3.20 of travel on American per $100 spent on dining and entertainment, and $1.60 of travel on American per $100 spent on anything that isn't air travel / hotel / dining / entertainment. Also until July 2017, you'll get $3.99 of travel on other airlines per $100 spent on air travel and hotels, $2.66 for every $100 spent on dining and entertainment, and finally $1.33 for every $100 on everything else. After July 2017, the return goes down to $3.75 per $100 on air travel and hotels, $2.50 per $100 on dining and entertainment, and $1.25 per $100 on everything else. I told you, it's a mess. In addition to the exemption from foreign transaction fees and the Priority Pass Select lounge membership standard across all the competition here, the standout benefit of the Citi Prestige is that the 4th night of your hotel stays will be refunded to you as statement credit. This can be an incredible value if you stay four or more nights in a hotel several times a year. You can find more Citi Prestige benefits here.
Who it's Good for: Travelers who stay four or more nights in hotels several times a year (and are willing to trade the lower rewards earning of Citi vs Chase), and who are willing to put up with the insanely confusing rewards earning scheme through July 2017.
Value Per Hundred
A quick explanation on how I calculate my Value Per Hundred figures, i.e. the amount you get back to spend towards travel for every $100 you spend on the card... Basically I take the number of points you earn per dollar spent, and multiply it by the bonus that some cards give when you redeem points for travel. For example, Chase Sapphire Reserve offers 3 points for every dollar spent on restaurants and travel, and then let's you redeem those points for travel at 1.5 cents on the dollar, so 3 x 1.5 = 4.50, which is your Value Per Hundred. Likewise, Citi Prestige gives you 3 points for every dollar spent on air travel and hotels, and starting in July 2017 will let you redeem those points for travel at 1.25 cents on the dollar, so 3 x 1.25 = $3.75. You could also think of this as a percentage, i.e. Chase gives you 4.5% off all restaurant and travel expenses.