Big Annual Fees! What Should You With That Expense Travel Credit Card In Your Wallet?

It feels good to be blogging on a regular basis but I’m still struggling to come up with the right topics to talk about with each of you on a daily basis.  As I struggled to think of the “best” thing I could write about today, I thought about just posting a link to my podcast episode from this week and calling it a day.  I’m still going to post that podcast link, because I do think you should listen.  But, I also wanted to expand on this week’s topic for both folks who listen and those that don’t.  First, this week’s episode:

Now, let’s dig into this topic a bit more.

Should You Cancel Travel Credit Cards With High Annual Fees If You’re Not Traveling?

For starters, I hope you’re not traveling.  Sure, there are some places where it’s safe (safer?).  But, there’s definitely risk involved with traveling at the moment.

If you’re holding on to a credit card with a high annual fee that earns you great travel benefits, you might be wondering if it’s worth holding on to right now.  Especially since we have no idea when travel will return to some semblance of normal, a card that offers you statement credits for airline fees isn’t carrying the value it used to.  If you’re unsure of your work situation (of if you’ve already been laid off or furloughed) you’ll want to know when your annual fees are coming up and what your plan is:

1. Consider calling customer service and asking them to waive the fee for a year.  If you’re not able to get all the perks out of the card, you have a reasonable argument for a waived or reduced annual fee.
2. Consider downgrading the card.  If you have a Chase Sapphire Reserved, for example.  With the fee increase, that card will cost you $550 per year.  If you can use the $300 travel statement credit, the annual fee is much more manageable.  Otherwise, the $95 annual fee the Sapphire Preferred might be more your style.  By downgrading you’ll be able to hold onto any Ultimate Rewards points in your account.
3. Cancel your card if you don’t think you’ll get the value out of the annual fee.  This might seem like a drastic choice.  But, annual fees are just an expense if you’re not actually using the credit card to earn points.  Remember to transfer any flexible currency (like Ultimate Rewards or AMEX Membership Rewards) to one of their transfer partners, or otherwise use them up before canceling your account.

Maximize Your Earning

If you do keep those premium cards, make sure you’re able to use the bonus categories to rack up points while you’re sitting at home.  Those points and miles should be worth plenty of exciting travel when we’re past the current crisis.  There are plenty of times when life is moving too fast for me to consider the best way to buy something.  It’s a cardinal sin, one I’ve committed more times than I can count.  If you’re off the road and have some free time on your hands, make sure you take a few minutes to research the best shopping portal to use, and that you’re maximizing those bonus categories.

Be Ready for Great Redemption Opportunities

As we discussed two weeks ago on my podcast, there are some phenomenal awards on sale right now.  Business class on Air Tahiti Nui for that once in a lifetime vacation to Tahiti are readily available.  I’m not ready to make that trip next month, and you probably aren’t either.  But, the further we go in this crisis, you may start to see a path where you’re comfortable booking those sort of trips, even if it’s next year.  Coming out of the Great Recession a decade ago, we saw plenty of affordable awards as travel companies tried to woo our business.  We’ve got plenty of ugly stuff left to deal with, but we may ultimately see that silver lining on these dark clouds.

The Final Two Pennies

There are two meaningful factors that should make you think long and hard about paying annual fees on premium credit cards right now.  The lack of ability to use the benefits and economic uncertainty make it a good time to consider whether everything in your wallet is working right for you.  There’s no shame in downgrading or canceling a card if you’re not getting the value out of it. Just make sure to safeguard those points in the process.  If you’re hanging in there, don’t worry about those points burning a hole in your pocket.  Some folks subscribe to the “earn and burn” strategy but this may very well be a good time to stock up.

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And, I hope you’ll check out my podcast, Miles To Go.  We cover the latest travel news, tips and tricks every week so you can save money while you travel better.  From Disney to Dubai, San Francisco to Sydney, American Airlines to WestJet, we’ve got you covered!