Which Annual Credit Card Bonuses Justify the Annual Fee?
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Today, TPG Senior Points & Miles Correspondent Jason Steele explains how some travel rewards cards pay for themselves through annual renewal bonuses, while others fall short.
Travel rewards cards can offer incredible welcome bonuses along with ongoing benefits, but each year points and miles enthusiasts have to decide whether to keep their cards open when it’s time to pay the annual fee. To keep your business, many card issuers offer an annual bonus for renewing your account, and these bonuses can be highly valuable on their own.
In this post I want to look at travel rewards cards that feature some sort of renewal bonus. After reviewing what you get with each card and how much it will cost you, I’ll give you my own recommendation of whether each bonus makes the card worth keeping.
IHG Rewards Club Select Credit Card
This card offers a certificate for one free night at any IHG property, to be completed within 12 months of the date of issue. The certificate is deposited into the cardholder’s IHG Rewards Club account within a few days of when the $49 annual fee is billed. For more information, see my post on Maximizing the IHG Rewards Card for Free Nights.
Take it or leave it? This is definitely an annual bonus worth taking, as it’s actually pretty difficult to get less than $49 of value from this certificate unless you simply don’t use it. Since it’s valid at any IHG hotel, it’s easy to get a value of $500 or more when staying at luxury properties.
The Hyatt Credit Card
Each year after your account anniversary, this card offers a free night certificate that can be used at any Category 1-4 property. The free night should appear in your account once you’re charged the $75 annual fee. Certificates are valid for 12 months from the date of issue, though there are reports of cardholders receiving a 30-day extension.
Take it or leave it? While this certificate isn’t as generous as the IHG offer, you can still get plenty of value from it at mid-range Category 3 and 4 properties, which typically cost between $100 and $200 per night. I find this certificate useful for airport hotels, where I might spend $100 on a mediocre property, but instead get to stay in a premier location, such as the Category 4 Hyatt Regency Orlando Airport that’s actually inside of the terminal. For more ideas, check out Nick Ewen’s list of 9 Low-Level Hyatt Properties that Make for Awesome Awards.
Southwest Rapid Rewards Premier Credit Card and Southwest Rapid Rewards Plus Credit Card
These cards (along with their corresponding business versions) both offer a fixed number of points each year on your cardmember anniversary. The Premier cards offer 6,000 points with an annual fee of $99, while the Plus cards offer 3,000 points with an annual fee of $69.
Take it or leave it? According to TPG’s latest monthly valuations, Southwest Rapid Rewards points are now worth 1.3 cents apiece. That means the bonus on the Premier cards is worth $78, while the bonus on the Plus cards is worth $39. In this case, the points awarded are not worth the annual fees paid. While the bonus does help to defray the cost of the annual fee, I wouldn’t keep these cards each year solely for the points.
United MileagePlus Explorer Card
This card offers an annual bonus of two United Club lounge passes each year, and comes with a $95 annual fee.
Take it or leave it? While this card offers other valuable benefits such as priority boarding and a free checked bag for the cardholder and a companion, the lounge passes alone are only worth around $30 (at least that’s what they sell for on the secondary market). Although this is a nice benefit to have, I definitely wouldn’t renew the card on that basis alone.
Marriott Rewards Premier Credit Card
This card offers an annual free night stay in a Category 1-5 hotel each year on your account anniversary, as well as 15 qualifying night credits toward elite status — enough for Marriott Silver, which requires only 10 stay credits, and nearly a third of the way toward Gold status, which requires 50 credits. This card has an annual fee of $85.
Take it or leave it? Silver elite status doesn’t get you that much in the Marriott Rewards program — mostly just priority late checkout and a 20% bonus on points earned from stays. On the other hand, the free night certificate is worth up to 25,000 points (the price of a category 5 award night), which equates to $175 based on TPG’s valuation of Marriott Rewards points (0.7 cents apiece). Even if you don’t value elite status, the free night certificate justifies the annual fee. For more ideas, check out Nick Ewen’s post on 6 Low-Level Marriott Properties that Make for Awesome Awards.
The Ritz-Carlton Rewards Credit Card
This card offers an annual bonus of three upgrades to the Ritz-Carlton Club Level each year, valid on paid stays of up to seven nights. There is a $450 annual fee for this card, which itself is largely offset by a $300 annual travel credit.
Take it or leave it? Club level rooms often cost $200 more per night than standard rooms, and include complimentary access to all manner of food and beverages. While you may not personally value the upgrade at $200 per night, just one certificate could easily be worth well over $100 on a longer stay. If you have paid stays at Ritz-Carlton properties, I think this benefit (combined with the $300 annual air travel credit) make the card worth keeping.
Platinum Delta SkyMiles Credit Card from American Express
This card offers a cardholder anniversary bonus of a free domestic companion certificate, which is valid for economy-class, round-trip flights within the contiguous 48 states — you only have to pay taxes and fees. There is a $195 annual fee for this card. For more information, see my recent post on companion ticket offers.
Take it or leave it? If you plan on purchasing a revenue ticket this year and flying with a companion, its hard not to get $195 in value from this offer, as there aren’t too many tickets below this price.
Delta Reserve® Credit Card from American Express
This card also offers an annual companion certificate, but it’s valid for first-class tickets as well as economy. This card comes with Delta Sky Club access, and has a $450 annual fee.
Take it or leave it? It’s pretty easy to get $450 in value for this companion certificate if you redeem in first class, and there’s real value in the card’s other features, such as Sky Club access, upgrade priority and the opportunity to earn Medallion® Qualification Miles. For most frequent Delta customers, this certificate makes the annual fee worthwhile.
Alaska Airlines Visa Signature credit card
This card offers an economy companion certificate for $121 ($99, plus taxes and fees from $22) each year on your account anniversary. The annual fee is $75 for Visa Signature accounts, $50 for Platinum Plus accounts, and varies for business cardholders.
Take it or leave it? This is a pretty valuable offer, especially if you have the Platinum Plus card with the lower annual fee. If you plan to purchase at least one revenue flight for two people each year, the cost of the annual fee will easily be justified.
US Airways Premier World Mastercard
This card (which is no longer offered to new applicants) offers a companion certificate for $99 (plus taxes) each year on your account anniversary. Unlike other certificates, this one can be used for up to two companions. The certificate is valid for coach fares in the 48 contiguous states and Canada (residents of Alaska and Hawaii can use it to fly to the lower 48 and Canada). This card has an annual fee of $89.
Take it or leave it? Once again, anyone who has plans to purchase domestic airfare for two (or three) people will easily save more than they pay in fees. However, be advised that there are blackout dates and plenty of other terms and conditions. Be sure to read Nick Ewen’s post on how to use this certificate. As for whether this benefit justifies the annual fee, it’s a moot point, since cardholders have already been transitioned to one of the AAdvantage Aviator cards.
Virgin America Visa Signature and Virgin America Premium Visa Signature
These cards offer a $150 companion ticket discount each year, but only for full-fare, round-trip tickets purchased more than 14 days in advance. The standard card has a $49 annual fee, while the Premium version has an annual fee of $149.
Take it or leave it? I think this benefit is kind of a gimmick, as you are certainly going to pay more than $150 extra for a qualifying fare, so I’m not sure if this certificate has much value at all.
Miles & More Premier World MasterCard
Although this Lufthansa co-branded card offers a companion ticket benefit each cardholder year, I found it to be among the most restrictive offered. It’s only valid on paid economy tickets in H class or higher, which are usually more expensive than the lowest fare. The annual fee is $79 for the Premier card and $59 for the standard version.
Take it or leave it? I certainly wouldn’t renew this card just to get the companion ticket unless I had rock-solid plans to benefit from it. Unfortunately, it would be pretty hard to pay for an H class economy fare and still get a good deal.
CitiBusiness AAdvantage Platinum Select World MasterCard
This card offers a 5% mileage bonus based on your eligible purchases throughout your cardholder year. It comes with a $95 annual fee.
Take it or leave it? According to TPG’s latest monthly valuations, American Airlines miles are worth 1.7 cents apiece, so you would have to spend over $112,000 in order for your 5% mileage bonus to be more than the $95 annual fee. For most people, this mileage bonus by itself is not enough reason to keep the card. However, there are other benefits that may make it worthwhile.
Wyndham Rewards Visa Card
Earn 15,000 bonus points each year on your account anniversary, which is enough for a free night at any Wyndham property in the newly restructured Wyndham Rewards program. There is a $69 annual fee for this card.
Take it or leave it? In Wyndham’s new award chart, all properties cost 15,000 points per night. As Nick Ewen pointed out in his look at Wyndham Properties that Make for Awesome Award Redemptions, you can get great value out of these points depending on where you use them. The annual fee for this card is higher than the one on the IHG Rewards card, but the end result is the same: Keeping the card is a no-brainer.
Club Carlson Premier Rewards Visa Signature Card
This card (as well as the business version) offers an annual bonus of 40,000 points, with annual fees of $75 and $60, respectively. The standard Club Carlson card offers a yearly bonus of 25,000 points with an annual fee of $50.
Take it or leave it? While Club Carlson and these co-branded cards have lost some of their luster recently with a major devaluation and the elimination of the free night benefit, the points you earn from the anniversary bonus outweighs the annual fee even at TPG’s valuation of 0.4 cents apiece.
As with any card, it’s always worth asking for the annual fee to be waived before renewing your account. Even if it isn’t waived completely, you may be offered additional points or miles worth as much as (or more than) the annual fee.
Another important note is that many of these cards offer the anniversary bonus when your annual fee is billed, whether or not you choose to renew your card. For example, I have always received the Southwest Airlines bonus points before I received my statement with the annual fee. The notable exception is with American Express, which requires that you renew your card before issuing the Delta Companion Certificates. In all other cases, your decision to renew the card should be based on your ability to use next year’s benefits, as you are already entitled to this year’s miles, certificates and other bonuses.
By understanding the value of the incentives that card issuers give you to renew your accounts, you can make the decision to renew or cancel based on your individual needs.
Which of these annual bonuses do you use regularly?