So you got to this site by the promise of an awesome deal. Then, buried near the bottom of the post, we mention that the card you need to use comes with a $450 annual fee! What gives?
Our favorite cards, and their annual fees, are: The Chase Sapphire Reserve ($450), the Citi Prestige ($450), The Chase Sapphire Preferred ($95, waived first year), and the Amex Premier Rewards Gold ($195, waived first year).
After the waived first years, carrying these four cards would cost you $1,190 per year. That does sound crazy! But here's why you should not be scared away by annual fees (read all of these, they aren't in any particular order because they will matter differently for different people):
1. The signup bonus will always be more valuable than the first year's annual fee
You're signing up for many of these cards mostly for the sign-up bonus. A 50,000 sign-up on any of these cards is always worth at least $500, so you're easily net positive that way. But hey, you wanted 50,000 FREE points, not to waste your time and energy to pay $450 for 50,000 points! So look onto number two.
2. These fees are almost all offset by travel credits
Each of these cards, except for the $95 per year Chase Sapphire Preferred, has a travel credit you can use on certain travel expenses. For the Reserve it is $300, for the Prestige $250, and for the Amex $100. That means if you can find a way to use these credits on things you were going to buy anyways, your annual fee is effectively decreased.
What's more, you can get these credits TWICE IN THE FIRST YEAR because it is given by calendar year. For the three most expensive above cards, using the travel credit twice will more than offset the annual fee for the first year. Of course, if you hold the card, you only get one credit per year you pay the annual fee, which is why we have number three.
3. You don't have to keep these cards longer than a year
You can almost always downgrade your card to a no-fee option after the first year to avoid the second year's annual fee. The no-fee card will not give you the great benefits of the better card, andto keep travel hacking you should probably not use it, but it will just sit their keeping your payment history pristine and your credit utilization low.
If no downgrade options are available (a rarity), you can cancel the card, though this is always a last resort, as it will look bad on your credit report. In some cases, downgrading is an awesome choice. We both signed up for the Sapphire Preferred to get the signup bonus. Once we got it, one of us downgraded to the Chase Freedom Ultimate, which was a great add to our card portfolio. If we didn't already have it, downgrading to the Chase Freedom would have been a great option as well. What about the other Preferred we had, well, onto number four.
4. Sometimes the cards are just worth the annual fee!
We'll always use our travel credits, and we will easily get $200 of value out of the Citi Prestige's fourth night free every year. We will probably get $150 of value out of the Chase Sapphire Reserve through its Chase travel portal perks every year. Beyond that, these cards get us Priority Pass, which is good for lounge access on many of our trips.
We don't recommend carrying a bunch of high annual fee cards just to be fancy. Actually, in no case have we recently signed up for a card with a first-year annual fee where we did not have a plan to immediately get exceptional value out of that card. Both of the Sapphire Reserves we hold earned us 100,000 Ultimate Reward Points in signup bonuses (good for $1500 in travel). We used the Citi Prestige to save over $2000 on a trip to Disney World. Including the travel credits that we used, we paid $1,350 in annual fees on these cards for $5,600 of value.