Why the end of the year is a great time to get a premium credit card
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Editor’s note: This is a recurring post, regularly updated with new information
It’s been a dynamic year for premium travel cards as issuers have adapted to a COVID-19 world. New benefits and limited time offers have appeared on the cards to offset any perceived loss of value because many of the travel perks and rewards the premium cards offer remain largely unused.
That said, we’re currently seeing large sign-up bonuses on top of increased flexibility in earning and redeeming rewards. What may happen in 2021 is still a mystery to us all, so the end of 2020 may be the right time to take advantage of what premium cards are offering.
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As we approach the end of the calendar year, the main reason I look at my premium travel cards is because of the valuable annual travel credits that come with them. 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 up to $550 every year for a premium credit card, the perks that come with that card can far outweigh that cost. Most of these cards include substantial annual travel credits, most of 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.
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 (limited-time COVID reduction for current cardholders through the end of 2020; ongoing annual fee is $550)||$300 (by cardmember year)||Automatically applied||All travel|
|The Platinum® Card from American Express||$550 (see rates & fees)||up to $200||To use the credit, you need to select a qualifying airline.||Baggage fees, in-flight food and drink|
|Citi Prestige® Card||$495||$250||Automatically applied||Airfare, baggage fees, lounge access, some in-flight purchases (limited time can use used at grocery stores and restaurants)|
|Hilton Honors American Express Aspire Card||$450 (see rates & fees)||up to $250 annual airline credit
up to $250 annual resort credit
|To use the airline credit, you need to select a qualifying airline.
The resort credit is automatically processed after a qualifying charge
|Baggage fees, in-flight food and drink.
Any stay or on-property purchase at a participating Hilton resort
|Marriott Bonvoy Brilliant™ American Express® Card||$450 (see rates & fees)||$300 Marriott Bonvoy statement credit (by cardmember year);||Automatically processed after an eligible charge||Any stay or on-property purchase at participating Marriott hotels|
The information for the Citi Prestige card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
As you can see, the credit amounts and applications can vary significantly from one card to the next. For example, the Chase Sapphire Reserve’s annual credit is far superior to the Amex airline credits because of a broad definition of travel and the reimbursements are automatic. For the Amex airline credits, we are regularly left wondering what will and won’t be eligible purchases and if you aren’t flying this year, they’re worth very little.
Key things to know
1. Most 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 now, you’ll be able to make purchases that may be covered by your credit for the rest of 2020 — then you’ll get to start all over again in 2021. The notable exception is the Chase Sapphire Reserve annual credit, which is by cardmember year, not calendar year.
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 50,000 ThankYou points.
3. The welcome offers could change. American Express is currently offering 75,000 bonus points after you spend $5,000 in purchases in the first six months of account opening and 10x spend on U.S. supermarkets and U.S. gas stations (capped at $15,000 in combined purchases for the first six months) for new Platinum cardmembers. This is a fantastic bonus I don’t think we’ll see stick around and if you’re on the fence about a premium card, this is an offer certainly worth considering. And you may also be eligible for a 100,000-point welcome offer by checking the CardMatch Tool (offers are subject to change at any time).
An underlying benefit to applying at the end of the year is the uptick in spending during the holidays for the typical American household. All your presents, holiday travel and meals will certainly put a dent in the minimum spend required to trigger a welcome offer.
If you find yourself in 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.
Featured image courtesy of The Naka Island, a Luxury Collection Resort and Spa.
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