The Insider Picks team writes about stuff we think you’ll like. Business Insider may receive a commission from The Points Guy Affiliate Network.
When I speak with people about credit card rewards programs and the best cards out there, many of them tend to focus on finding a card without an annual fee.
On quick thought, that makes sense. Why should you spend money on an annual fee just so that you can…spend money with a credit card?
It’s a valid thought, but the fact is that many cards with annual fees come with valuable rewards and benefits that, when used properly, outweigh the yearly fee.
This is true for cards with lower annual fees — like the $95 Chase Sapphire Preferred, as long as you spend on it — and for mid-priced cards like the Platinum Delta SkyMiles Card from American Express, which has yearly benefits that are more valuable than the $195 annual fee.
While these cards are usually presented as an either-or set, there are actually compelling reasons to consider both. Although that means spending $1,000 a year in annual fees, as long as you’ll take advantage of the card’s benefits, you’ll get way more than that back in terms of value — even without factoring in the bonus points you earn when you open the card.
Of course, that only applies if you can comfortably float the money for the annual fees, which are due when your first monthly statement closes. While you’ll get the value back, you still have to pay it up front.
Here’s why it might be worth having both cards. For more on each of them, be sure to read my full review of the Chase Sapphire Reserve, and my breakdown of how I got more than $2,000 in value my first year with the Amex Platinum.
Keep in mind that we’re focusing on the rewards and perks that make these cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.
When you’re working to earn credit-card rewards, it’s important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically,treat your credit card like a debit card.
Applying travel credits against the annual fee
To start, the annual fees are a little bit misleading. Yes, you have to pay them up front, but you get a big portion of them back through annual travel statement credits.
The Chase Sapphire Reserve offers a $300 travel credit each card member year. It’s automatically applied to your first $300 in travel and transit spending, covering those purchases (or, if one single purchase is larger than $300, covering the first $300 of it).
When you subtract the $300 credit from the $450 annual fee, the Sapphire Reserve’s fee is effectively just $150.
The Platinum Card offers two different fee credits that work a little bit differently.
You can get up to $200 a year in Uber credits each card member year. Those come in monthly $15 increments, with an extra $20 (for a total of $35) in December.
Next, there’s an airline fee credit each calendar year. Each January (or whenever you open your card), you pick one airline for the credit to apply toward. While the credit doesn’t cover tickets, it covers incidental fees like checked bags, seat assignments on basic economy tickets, change fees, and more. Sometimes you can even be reimbursed for airline gift cards that you can apply toward tickets, even though this is an unpublished benefit — do some Googling to see whether that works on your airline of choice.
When you subtract the two credits,the Platinum Card‘s annual fee is also just $150.
But wait! Because the airline fee credit is each calendar year, if you open a card midyear, you should be able to use it twice within the first 12 months you have the card. That means that at the end of your first year, you’ll have gotten back the entire fee, plus an extra $50.
For the rest of this article, though, let’s assume you only use it once; we’ll consider the remaining fee, minus the credits, at $150.
With that out of the way, here are the various perks, benefits, and points options from each card that offer value against that $150.
Auto rental insurance
The Sapphire Reserve offers a primary auto rental collision damage waiver, or free loss and damage coverage when you use the card to pay for a rental car. Just decline the collision/damage/loss coverage offered by the rental agency. Keep in mind you may still want to opt for the rental company’s liability insurance.
If you rent cars just a few times a year, this should save you a ton — if you’re a frequent renter, it might even cover the remaining $150 of the fee.
Trip delay insurance and other travel protections
When you’re traveling and you’re delayed for at least six hours, or overnight, you’re covered for up to $500 of incidentals per person traveling with you whose ticket was purchased with the card. That covers things like hotel accommodations, meals, toiletries, and a change of clothing — really, anything that can be considered a “reasonable” expense.
Similarly, if your baggage is delayed, things like clothing and toiletries are covered up to a certain amount until your bag is delivered. The card also comes with trip cancellation/interruption coverage.
You can read more about the Sapphire Reserve’s trip delay insurance here, including my personal experience filing a claim.
If you’re someone who normally buys travel insurance, using the insurance that comes with the card can easily save you $20-50 every time you travel. If you don’t buy insurance, you’ll still be covered during a delay, and you’ll be covered for potentially hundreds of dollars. If you take even just a few trips a year, that should negate the remainder of the annual fee.
And we haven’t even gotten to the rewards yet.
Rewards earning and redeeming
The Sapphire Reserve earns 3x points per dollar spent on all travel — including local transit, taxis, parking, ride shares, tolls, hotels, Airbnbs, airfare, cruises, and much more — and dining, which includes restaurants, fast food, cafes, bars, and more. It earns one point per dollar on everything else.
Points within the Chase ecosystem can be valuable compared to other rewards programs, especially if you hold a Sapphire Reserve.
Points can be exchanged for cash back, gift cards, or statement credits, with each point worth 1¢. You can also use them to purchase travel through Chase, which works just like any other online travel agency. When you use points that way, and you’re a Sapphire Reserve cardholder, you can get a 50% bonus — in other words, each point will be worth 1.5¢ instead. Finally, you can transfer points to Chase’s airline and hotel partners’ loyalty programs — transferring points is generally the most valuable way to use them.
Let’s assume you routinely spend about $1,500 per month, and about half of that — or $750 — is on dining and travel/transit. You’ll earn about 3,000 points per month, or 36,000 in a year. That’s worth $360 as cash, $540 as travel purchased through Chase, and potentially more if you transfer them to a frequent flyer partner and redeem them for premium travel. Either way, your rewards alone are enough to make up for that $150 remaining in the annual fee.
The card also comes with a number of other benefits, including access to airport lounges through the Priority Pass program, a credit to cover enrollment in TSA PreCheck/Global Entry, purchase protections, and more. When you get the card, be sure to flip through the benefits guide.
The Platinum Card
While the Sapphire Reserve offers access to more than 1,200 airport lounges — as well as credits to a number of restaurants, spas, and other properties — many of these lounges are in international terminals in US airports, or in foreign airports.
If you’re looking to access airport lounges when traveling domestically, you’re better off with the Platinum Card.
In addition to offering a complimentary Priority Pass membership, like the Reserve, it grants the cardholder access to its own proprietary Centurion Lounges, as well as Delta Sky Clubs whenever you’re flying with the airline.
Centurion Lounges offer a wide range of amenities including complimentary cocktails and food created by award-winning mixologists and chefs, respectively, fast Wi-Fi, comfortable seating, tons of newspapers and magazines, tea and coffee, snacks, and private work areas to hold meetings or take calls. Some locations also feature shower suites, spas, or relaxation areas.
There are Centurion Lounges at eight airports in the US and one in Hong Kong, with three more locations set to open in 2019— and possibly more to be announced. There are also 11 American Express lounges in international airports. Access is exclusive for Platinum and Centurion (Black) cardholders.
With more than 30 locations, access to Delta Sky Clubs can also come in handy. They offer snacks, breakfast, complimentary soft and alcoholic drinks, sometimes more substantial food during meal times, fast Wi-Fi, and spacious, comfortable seats so that you can relax before your flight. Some of the larger locations feature showers, too.
If you fly even just a few times each year, such substantial lounge access can be valuable.
Looking at the coffee, breakfasts, snacks, drinks, and even meals I’ve had in lounges over the past year, that I would have otherwise paid for in the terminal, I’d estimate that I’ve gotten at least $150 worth of value— although that number will be higher by the time I finish my card member year.
Elite status at hotels
Elite status at hotels often includes perks like daily breakfast, room upgrades, early check-in or late checkout, premium internet, lounge access, free nights, points-earning bonuses, and more.
Platinum cardholders can get gold-level elite status at Starwood, Marriott, and Hilton hotels. Normally, you would need to stay for 40-50 nights to earn that level of status, so if you stay anything less than that — but often enough to use the benefits — this can come in extremely useful.
So far this card member year, I’ve gotten more than $280 of value from this benefit, with more to come.
Rewards earning and redeeming
The Platinum Card earns 5x points per dollar spent on flights purchased directly from the airline or Amex Travel, or pre-paid hotel bookings made through Amex Travel, and one point per dollar on everything else.
Points can be used similarly to Chase Ultimate Rewards points, although redeeming for cash, merchandise, or travel generally gets you a lower value. The best option is transferring to an airline.
However, since earning the welcome offer, I don’t often use my Platinum Card for everyday spending unless I need to in order to to get a certain benefit or unlock an Amex Offer. Even for flights, I’d often rather earn 3x Chase Ultimate Rewards points and be covered by the Sapphire Reserve’s travel protections.
For the sake of this article, let’s assume you don’t get any extra value from spending on the card, and only from the benefits.
There are plenty of other benefits that come with the Platinum Card, including exclusive access to a concierge service, a credit to cover enrollment in TSA PreCheck/Global Entry, purchase protections, a free membership in Boingo’s preferred plan, which gets you access to more than 1 million WiFi hotspots around the world, access to the AmEx Fine Hotels and Resorts program, and much more.
The Chase Sapphire Reserve offers a sign-up bonus of 50,000 points when you spend $4,000 within the first three months of having the card. That’s worth $500 as cash, $750 when used to buy travel through Chase, or potentially more when transferred to airline partners.
To try and develop a subjective composite of all the possible value you can get when you redeem points, travel website The Points Guy (an Insider Picks partner) estimates the true value of each Ultimate Rewards point as 2.1¢. Going by that number, the sign-up bonus is worth around $1,050. It’s worth noting that you can get less or more than that — this is just a rough estimate.
The Platinum Card, meanwhile, has a standard welcome offer of 60,000 Amex Membership Rewards points when you spend $5,000 in the first three months. These are worth up to $600 when you use them to book flights through Amex Travel, less for most other uses, or potentially more when transferred to Amex’s airline partners.
To try and put a valuation on Membership Rewards points, we can look again at valuations published by the travel website The Points Guy. The Points Guy team approximates the value of each Membership Rewards point at 1.9¢, though again, it’s possible to get a lesser or much greater value depending on how you use them. That makes the welcome offer worth around $1,140.
Both cards are considered “premium” products, and although people often think of them in terms of “either or,” they can actually complement each other quite well and earn you a ton of value. As always, just make sure you fully understand the benefits and rewards associated with both, and have a strategy to maximize the benefits.
Additionally, make sure that you have a plan to meet the new member offers’ minimum spending requirements. Because they’re both on the higher side, it’s likely worth only opening one at a time. Plus, that way you can spread out the annual fees by a few months.