The Best Credit Cards for Paying Taxes and Fees on Award Tickets
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Unless you’re new to the points and miles hobby, you’re probably all too familiar with the fact that those “free” award flights are almost never completely free. Although there are ways to cut them down, you’ll almost always face the unfortunate addition of taxes and fees. These can range from $5.60 to upwards of $800 one-way for some aspirational awards, such as Emirates first class.
When it comes to paying these fees, the best credit card for airfare purchases isn’t always the best option. Unlike cash tickets, there’s a more important factor to consider than just how many extra points you’ll earn: travel protections such as baggage and trip delay reimbursement can be hugely valuable, and some card policies stand out more than others. Meanwhile the insurance policies offered by issuers such as American Express require you to pay for the full cost of your ticket if you want any of its travel protections, while those offered by others like Chase and Citi do apply to award tickets. And on top of all that, come Sept. 22, 2019, Citi will discontinue all travel protections altogether.
With all that in mind, here’s a rundown of the best credit cards for paying taxes and fees on award tickets (and yes, it’s a surprisingly short list).
Top Cards for Paying Taxes and Fees on Award Tickets
1. Chase Sapphire Reserve: Best travel protections
2. Ink Business Preferred Credit Card: Good return on spending, solid protections and low annual fee
3. Chase Sapphire Preferred Card: Solid protections and low annual fee
|Card||Bonus for Airfare Purchases/Return*
||Protection Notes||Annual Fee|
|Chase Sapphire Reserve||3x points/6%||Best protections all-around||$450|
|Ink Business Preferred Credit Card||3x points/6%||Weaker across the board than the Chase Sapphire Reserve, but good enough for most situations||$95|
|Chase Sapphire Preferred Card||2x points/4%||Weaker across the board than the Chase Sapphire Reserve, but good enough for most situations||$95|
*Bonus value is an estimated value calculated by TPG and not the card issuer.
Once the changes to the Citi Prestige card take effect, the Chase Sapphire Reserve will offer the most comprehensive suite of travel protections. By paying for at least a portion of your ticket, you’ll be covered by a plethora of protections, including baggage delay, lost/damaged baggage, trip delay reimbursement, trip cancellation and interruption protection, medical evacuation benefit, travel accident insurance and emergency medical and dental benefit.
Of these, the most important benefits in my opinion are trip delay reimbursement, which provides up to $500 per ticket if you’re delayed more than 6 hours or require an overnight stay, and baggage delay protection, which provides up to $100 reimbursed per day for up to 5 days if your baggage is delayed more than 6 hours.
This card also provides 3 Chase Ultimate Rewards points per dollar spent on all travel and dining purchases. Based on TPG’s latest valuations this means an effective 6% return on travel and dining purchases. So, you’ll have the peace of mind knowing you’re insured and still earn a fair amount of bonus points on any taxes and fees. Other benefits include an annual $300 travel statement credit, a Global Entry application fee credit and a Priority Pass Select membership that includes guests.
For more information on the Chase Sapphire Reserve, check out the following guides:
- Break-Even Point on the Chase Sapphire Reserve Card
- 4 Things To Do Once You Get Chase Sapphire Reserve
- Everything You Need to Know About Chase Sapphire Reserve Perks
- Which Purchases Count as Travel With Chase Sapphire Preferred and Chase Sapphire Reserve?
The next best option for paying award taxes and fees is a business credit card, but none of the travel protections of the Ink Business Preferred require the purpose of the trip to be business. The Business Preferred offers many of the same benefits as the Chase Sapphire Reserve, but down a notch. For instance, the card offers trip delay reimbursement, but only for delays that are more than 12 hours or require an overnight stay.
What’s unique about this card is that although it has a significantly lower annual fee than the Chase Sapphire Reserve, it offers the same travel earning rate of 3 Chase Ultimate Rewards points per dollar spent on airfare and everything else that Chase includes in its travel classification.
For more information on the Ink Business Preferred Credit Card, check out the following guides:
- Credit Card Review: Ink Business Preferred Card
- 5 Reasons to Get the Chase Ink Business Preferred Credit Card
- One Year of Earning and Burning with the Ink Business Preferred Card
- Frequently Asked Questions About the Ink Business Preferred Credit Card
The Chase Sapphire Preferred is ideal for infrequent travelers. It provides similar travel protections as the Ink Business Preferred, including trip and baggage delay protection, and has the same modest $95 annual fee. With this card, you’ll earn 2 Chase Ultimate Rewards points per dollar spent on travel and dining purchases.
For more information on the Chase Sapphire Preferred, check out the following guides:
- Credit Card Review: Chase Sapphire Preferred
- 5 Reasons Chase Sapphire Preferred Should Be Your First Card
- 5 Things To Do When You Get Chase Sapphire Preferred
- 5 Chase Sapphire Preferred Benefits You Might Not Know About
- 24 Fun Facts About the Chase Sapphire Preferred
At first glance, it may seem like The Platinum Card® from American Express or The Business Platinum® Card from American Express are obvious choices that are missing from this list, as they offer 5x points on all airfare purchased through Amex Travel, while all the cards discussed in this list get less. However, in most cases, the taxes and fees on these awards are so cheap that it’s worth forgoing the couple extra dollars in points you’ll get to focus on all the extra insurance features that could potentially save you thousands if something goes wrong.
So in this case, don’t worry about losing a few extra points — instead, buy yourself peace of mind with top travel protections just by putting a few dollars on one of these top cards.
Featured image of first class on Lufthansa’s 747 by Zach Honig / The Points Guy.
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION: $1,600
CARD HIGHLIGHTS: 3 points per dollar on the first $150,000 in combined spending on travel, shipping purchases, internet, cable and phone services, and advertising purchases made with social media sites and search engines.
- Earn 80,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®
- Earn 3 points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year
- Earn 1 point per $1 on all other purchases–with no limit to the amount you can earn
- Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards
- Redeem points for travel, cash back, gift cards and more – your points don't expire as long as your account is open
- No foreign transaction fees
- Employee cards at no additional cost
- $95 Annual Fee