Is That $800-a-Year Credit Card Still Saving You Money?

How to decide if the fees are worth it

Premium cards can pay for themselves, and if it’s a card you already have, your statements will tell you a lot. Add up the value of the benefits you got over a year’s time to see if you at least earned your annual fee back.

There’s more guesswork involved if you don’t have the card yet, but you can still estimate what you’ll use. If that subscription to Apple TV/Music, Uber Cash credit or DashPash membership are the draw, add up what you’d pay for those otherwise.

• Keep in mind: The “card value” touted on an issuer’s website may be in the thousands, but very few cardholders cash in on all those perks, and some are difficult to earn. For example, the $300 dining credit on the Sapphire Reserve can only be used at participating restaurants in certain cities, which could make it useless to people who don’t spend time there.

Beyond the basic math, there are other important considerations. Start with these questions:

Has the card outlived its usefulness? Premium cards tend to have travel-centric perks. If you got the card to score a valuable welcome offer or other bennies for your big trip to Europe, is it still worthwhile a year later? A downgrade may be in order if you don’t have similar trips on the horizon.

Did you carry a balance this year? You want to avoid interest charges on any credit card balance, but they quickly erode the value of a premium card, effectively cancelling out the rewards. Most of us have needed to regain our financial footing at one point or another, but if you can’t afford to pay off your balance in full each month, you’re better off without it.

Do you enjoy playing the rewards game? If you want to milk the value of your card, you have to play the points and perks game. That means remembering to opt in for statement credits, comparing point values across partner airlines and hotels, and scooping up limited-time offers. It can also require paying for different items with different cards (to maximize the rewards.) If these sorts of things give you a headache, go with a card that has a simpler rewards structure and lower fee.

Is status the allure? Part of the draw of premium cards is the exclusivity they bring. You get to be part of a secret metal card club that may feel like it comes with a “backstage pass” to luxury. But 21% of cardholders now carry at least one premium credit card, according to PYMNTS Intelligence. If you think you’d find those airport lounges too overcrowded to be enjoyable, it’s worth reconsidering.

If you’re a new cardholder, will you spend enough to earn the welcome offer? The sign-up bonus is often what tips the value equation for a new cardholder. But securing it requires meeting minimum spending thresholds. To earn 125,000 points with the Sapphire Reserve you must spend $6,000 in the first three months. The Platinum Card requires $8,000 in the first six months. If those amounts sound out of reach, these are not the cards for you.

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