One of the key parts of the frugal travel game is being smart about credit and opening credit cards in order to earn points and miles. However, the challenge does not start and end with understanding credit scores and how credit changes affect your lifestyle. The other half of the challenge is contending with the annual fees that come with many of our credit cards and recovering that deposit to earn valuable miles every year.
Although there are ways to get the value of the credit card annual fee reduced or even removed in some cases, smart travelers are proactive about recovering their money. By understanding the benefits and downsides of their cards, every traveler can make sure their spending equates to value every year.
How can travelers find the balance between annual fees and recovering value? Let’s explore this concept using one of my (formerly) favorite cards: the Platinum Card from American Express.
Starting this year, travelers will pay $550 in an annual fee for the honor of holding the Platinum Card and earning transferrable Membership Rewards points. In exchange, frugal travelers earn five Membership Rewards points for flight bookings and hotels prepaid through American Express Travel. While the $550 fee sounds like a lot of money, there are ways to make that money back every year.
To begin, the card comes with a $200 airline credit, redeemable aboard just one airline partner every year. While the airline credit is intended to cover incidental fees (such as checked luggage fees), many travelers have found ways to apply that credit elsewhere. With this off the top, cardholders receive a portion of their annual fee back every year, lowering the annual fee down to $350.
For those who have either not applied for a trusted travel program, or find their trusted travel membership is expired, the card also offers a one-time credit to cover a trusted travel program fee. This can range from the $50 for NEXUS, all the way up to the $85 for TSA PreCheck or $100 for Global Entry. For those who would pay out of pocket for those expenses, this benefit can save an additional $100 off the annual fee.
With both of those benefits, travelers must now find between $250 and $350 of value to make holding the card a valuable proposition. How can this be achieved? First off, Membership Rewards points can be transferred to a number of partners, with some that overlap with other programs. Through these transfers, travelers can obtain value that equals to the amount paid for the annual fee.
What about ancillary benefits? As I have considered before, the Platinum Card in of itself comes with several key benefits, from roadside protection to private jet booking opportunities. In the event one has a tire go flat, or need to book a private jet at the last minute, American Express can help you with either situation.
Of course, there are other benefits that allow travelers to make the most of their card. Without knowing each of these benefits, travelers cannot recover the benefits of their annual fee every year, resulting in paying money to the bank without any return. If a traveler cannot get equivalent value out of their card, it may be time to let that card go.
While the points and miles game has its challenges, there is nothing that cannot be overcome by using logic and an understanding of benefits. By understanding how to recover value, every frugal traveler can make the most of every card, every time.
How do you get value out of each cards in excess of the annual fee? Share your tips with other frugal travelers below!
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com