Raise your hand if you have heard a travel credit-card pitch recently — a flight attendant walking the aisles with applications before landing, a gate agent suggesting you sign up so you never fork over $45 for a checked bag again, or an influencer promising in a breathless post that a sign-up bonus will turn you into a jet-setter like them.
What You Are Actually Buying
Credit cards with travel perks are great for banks and airlines. Delta expects to take in $9 billion from American Express this year. Southwest wants in too, and is planning to launch a premium card and lounges. The question is whether the ones charging hundreds of dollars a year in annual fees are right for you — and the Journal’s columnist notes that often the answer is none of them.
Travel frequency is the first test. The perks are travel-centric: airport-lounge access, annual credits, free checked bags, Global Entry and TSA PreCheck memberships, travel insurance, souped-up status, and a points multiplier on travel purchases. Tantalizing — but not always right. One reader asked whether she should upgrade to the $895-a-year American Express Platinum; she and her husband own a second home in England and fly there a few times a year, and care more about racking up British Airways points than sitting in a lounge. The advice was to stay with her $95-a-year British Airways card.
Lounge access, the emotional core of the pitch, is shrinking. Lines and wait lists are far too common, and perks like guest access are shrinking or gone. Delta even curbs the number of annual visits to its Sky Clubs — and beginning next year, Delta will not let you into its top-of-the-line Delta One lounge if you buy one of its new stripped-down business-class tickets. If lounge access is your main draw, check those restrictions first, then survey your home airport and frequent destinations, because the quality varies enormously by city.
The Fine Print on the Famous Bonus
The Chase Sapphire Preferred card — the $95-a-year card influencers cannot stop touting — is offering 100,000 points in Chase’s rewards currency if you sign up by July 30. It is a genuinely good affordable starter card and a generous bonus, and the columnist mentioned it to her own 26-year-old son. Then she read the fine print: you have to spend $5,000 on the card in three months to get it.
Every card has a version of that hurdle. American’s lineup of Citi cards requires a minimum spend of $3,500 to $7,000 in the first three or four months; one Amex Platinum bonus requires $12,000 in spending in the first six months. Piles of points are a no-brainer if you have a business or big expenses coming up — a honeymoon, say — and can pay the bill in full. But not everyone new to the points game has that much lying around, and the influencer suggestions for manufacturing the spend (prepaying insurance, gym memberships, car repairs) also require cash.
Even the redemption is work. The 100,000-point bonus has only been offered three times since the card was introduced, and one of the best values comes from transferring points to an airline partner — but do not expect your pick of round-trip business-class flights to Europe. The only option one search turned up for two people was New York to Porto, Portugal, via Madrid on Air Europa in October. There is a reason there are Reddit forums for each card out there. And the hard rule underneath all of it: do not consider one of the pricey cards unless you can pay the balance in full every month, because high interest charges will wipe out any value from points and perks.
Annual-fee arithmetic is a miniature of all financial planning: the perks are real, the fine print is the price, and the influencer touting the card is not paying your interest rate. Run the same calculation you would run on any product with a fee — what does it cost, what does it return, and what does it return to me, at my travel frequency, from my home airport?
Action: no trade. Visa (V) and Mastercard (MA) collect on the transaction either way, which is precisely why the book owns the rails and not the points — see this edition’s swipe story. If you carry a balance, the entire category is negative-yield and the honest answer is a no-fee card and a payoff plan.
- V · Visa · the rails, reinforced at weight
- MA · Mastercard · the rails · index exposure
- Points · Not an asset class · no position