Chase Sapphire Reserve℠

Why the End of the Year is a Great Time to Get a Premium Credit Card

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While Citi Prestige was recently devalued (with more negative changes on the way), 2016 has certainly been a banner year for premium travel cards, thanks in no small part to the recent release of the Chase Sapphire Reserve Card. Along with most other premium cards, Sapphire Reserve has perks that easily make the large annual fee worthwhile to those who travel often.

Apart from the sign-up bonus, the benefits that most quickly offset the annual fees for these premium cards are annual travel credits. Today, I’ll explain why it’s important to strategize the time of year in which you sign up for a premium card so you can maximize the annual travel credits, and work toward the minimum spending requirement for the sign-up bonus.

Annual Travel Credits

While you might balk at the idea of paying $450 every year for a premium credit card, the perks can far outweigh that cost. Most of these cards include substantial annual travel credits, which are based not on the first 12 months of you having the card, but rather on the calendar year. This makes the end of the year an appealing time to sign up — while you’ll need to pay the annual fee right away, you’ll have an opportunity to take full advantage of the travel credit both this calendar year and next.

For example, if you applied for and received the Ritz-Carlton Rewards Credit Card right now — with its current bonus of three complimentary nights after spending $5,000 in the first three months — you would pay the first year’s annual fee and could immediately use the $300 travel credit. On January 1, 2017, you’d get an entirely new $300 credit, even though you just got one a few months earlier. Without even factoring in the sign-up bonus and all the other benefits of the card, this alone gives you $600 in travel credits for the first year’s $450 annual fee.

The Sapphire Reserve could give you $900 in Airbnb credit. Image courtesy of Airbnb.
The Chase Sapphire Reserve Card could get you $600 in Airbnb credit. Image courtesy of Airbnb.

Here’s a recap of the premium cards offering travel credits, their annual fees and the eligible uses for the credits:

  Annual Fee Travel Credit Amount How It’s Processed Eligible Uses for Credit
Chase Sapphire Reserve $450 $300 Automatically applied All travel
Platinum Card from American Express $450 $200 To use the credit, you need to select a qualifying airline. Baggage fees, in-flight food and drink
American Express Premier Rewards Gold Card $195 (waived the first year) $100 To use the credit, you need to select a qualifying airline. Baggage fees, in-flight food and drink
Citi Prestige Card $450 $250 Automatically applied Airfare, baggage fees, lounge access, some in-flight purchases
Ritz-Carlton Rewards Credit Card $450 $300 You need to call in after using the card for an eligible purchase. Baggage fees, seat upgrades, in-flight entertainment, in-flight meals preferred lounge memberships or passes

As you can see, the credit amounts and applications can vary significantly from one card to the next. For example, the Sapphire Reserve’s annual credit is far superior to the Ritz card’s because all travel is included and the reimbursements are automatic. For the Ritz card, you have to call in for each reimbursement and the credit only applies to a limited number of purchase types.

Key Things to Know

1. Annual travel credits are issued based on the calendar year, not each 12-month period after you sign up. So if you add a new card in October, you’ll be able to make purchases that may be covered by your credit in October, November and December of this year — then you’ll get to start all over again in 2017.

2. The amount reimbursed by a credit still counts toward minimum spend. Another perk is that you can use the travel credits to work toward the minimum spending requirement for a card’s sign-up bonus. So if you sign up for the Citi Prestige Card and make travel purchases that count toward the $250 annual credit, even though you’ll be reimbursed for the charges they’ll still go toward the $4,000 you need to spend in the first three months to get 40,000 ThankYou points.

3. The sign-up bonuses could change. Just because the Chase Sapphire Reserve Card offers 100,000 bonus points now doesn’t mean the same offer will be around next month, or even tomorrow. Card issuers can modify sign-up incentives whenever they see fit, so if you see a compelling offer now, it may not make sense to wait.

Stay organized when applying for cards so you can maximize benefits. Photo courtesy of Shutterstock.
Stay organized when applying for cards so you can maximize benefits. Image courtesy of Shutterstock.

If you find yourself in October, November or December looking to add a card which offers an annual travel credit, remember to quickly use the first year’s credit so on January 1 you can put another $100-$300 right back in your pocket.

Are you planning to sign up for a premium credit card before the end of the year?

Chase Sapphire Reserve℠

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  • New! Earn 100K bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,500 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases such as airfare and hotels charged to your card
  • 3X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases. Plus, no foreign transaction fees
  • Get 50% more value when you redeem your points for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 100,000 points are worth $1,500 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 900+ airport lounges worldwide with complimentary Priority Pass™ Select membership
  • Up to $100 application fee credit for Global Entry or TSA Pre√®
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Intro APR Regular APR Annual Fee Foreign Transaction Fee Credit Rating
N/A 16.24%-23.24% Variable $450 0% Excellent Credit