Many premium credit cards are worth signing up for because they have great welcome bonuses that are worth more than the first year’s annual fee. That’s not the question. The question is whether the cards are worth keeping past the first year. When the second year annual fee comes due, should you keep or cancel?
Premium and ultra-premium cards typically offer terrific benefits in exchange for high fees ($95 to $595 per year). Sometimes the value of the benefits far outweigh those fees, but not always.
Do the card’s benefits outweigh the annual fee? Each person should conservatively estimate the value of each benefit to them to figure this out. I recommend trying to estimate how much you’d be willing to pay for this feature if it was available stand-alone as a subscription. For example, if a card offers free checked bags, you could save hundreds of dollars if you use that benefit often enough. But how much would you pay for an annual subscription to get free checked bags? That answer should be substantially lower than the amount that you think you’ll save. Otherwise, why prepay for that benefit?
To help you come up with your own estimates, I created a Google Doc spreadsheet with tabs for each of the most popular ultra-premium rewards cards (and a handful of popular premium cards). Click here to open the spreadsheet.
The spreadsheet currently includes general estimates of how much each major card benefit may be worth, along with my own personal valuation to give you an idea of how I think about each.
To use the spreadsheet, create a copy of it and then overwrite the values in columns D and E on each tab with your own value estimates.
New Approach to Valuing Sapphire Reserve 1.5 cents Redemptions
The Sapphire Reserve card offers the ability to redeem points for 1.5 cents each. I used to compare this to the Sapphire Preferred which offers 1.25 cents per point value. I used to estimate how many points I might redeem and then multiply by the different value of the two cards (0.25 cents per point) in order to come up with how much extra value the Sapphire Reserve offers over the Sapphire Preferred. The problem with that approach is that I wouldn’t redeem points for 1.25 cents each with the Sapphire Preferred. If I didn’t have the Sapphire Reserve card, I’d use my points exclusively for transferring to airline and hotel partners when outsized value awards were available.
So, for my latest examples in this spreadsheet, I decided instead to estimate the lowest value at which I would be willing to redeem points and then use that as the comparison. In my case, I decided that I would redeem points for as low as 1.4 cents per point. So, I now calculate the value of redeeming for 1.5 cents per point as: Number of points I expect to redeem times 0.1 cents per point (the difference between 1.5 and 1.4).
Tips for using the spreadsheet effectively
- Be conservative with your estimates. Enter values that you would pay for a subscription for that benefit rather than the amount you expect to save.
- Don’t double count perks. Once you identify cards that you know that you’ll keep year after year, make sure to consider that when evaluating overlapping benefits on other cards. For example, I know I’ll keep my Ritz card which has a fantastic version of Priority Pass, so I assigned $0 value to every other card that offers Priority Pass.
The Card Roundup
At the time of this writing, the spreadsheet includes the following cards…
My Personal Keepers
Here’s where I landed after analyzing each card:
To understand the above results, keep in mind the following dependencies:
- The Ritz card is an obvious no-brainer for me since it offers many perks that I highly value. As a result, other cards that offering duplicative benefits were not valued as highly. For example, I don’t value getting Priority Pass from any of the other cards since this one gives me Priority Pass with unlimited guests.
- After analyzing both the consumer and business versions of the Amex Platinum card, I realized that the consumer card was closer to a keeper this year, so I zeroed out the duplicate benefits on the business tab. For example, there’s no advantage to having two cards that offer Emergency medical evacuation.
- Similarly, the values I assigned to the Delta Reserve consumer card assume I already have the Delta Reserve business card, so some of the card’s benefits were zeroed out.
Also keep in mind:
- I live near a Delta hub (Detroit) and like to use Delta credit cards to manufacture high level elite status for both me and my wife.
- I rarely fly AA or United
- I’ve gotten very good at getting full value from credit card travel credits, so my net cost on many of these cards is far less than it appears.
UPDATE 10/25/2020 Version 3.5: Added Chase’s Pay Yourself Back feature. Added Refer-A-Friend to all Amex cards. Added a placeholder for an expected new Amex Gold feature. Changed many of the recommended valuations. Changed how I value Sapphire Reserve 1.5 cents per point redemptions.
UPDATE 5/18/2020 Version 3.4: Changed name to “Premium Cards” (previously “Ultra-Premium Cards”). Updated screenshots in this post.
UPDATE 2/2020 Version 3.3: Worksheet only changes. Added Sapphire Preferred. Added row in Sapphire Reserve for valuing ability to transfer to partners.
UPDATE 1/9/2020 Version 3.2: I added recent changes to the Sapphire Reserve. The annual fee goes up to $550 and they add Lyft and DoorDash benefits.
UPDATE 11/4/2019 Version 3.1: That was fast! I last published this post 5 days ago with Version 3.0 of the spreadsheet. Since then, we learned of the CNB card’s massive devaluation (click here for details). So, I’ve updated the spreadsheet to version 3.1 with the new CNB info. Personally, this meant that the CNB card is no longer a keeper for me. As a result, my valuations of other cards increased. I’ll now be leaning on my US Bank Altitude Reserve card for free in-flight Gogo passes. And I’ll switch to my Ritz card for Priority Pass and for the Discount Air Benefit.
UPDATE 10/30/2019 Version 3.0:
I last published version 2.0 of the ultra-premium card analysis spreadsheet in February, but things have already changed enough to warrant an update. One critical change was Citi dropping their purchase and travel protections. If you thought the Citi Prestige was worth keeping before, you might want to take a second look. Personally, I’ve retreated back to my Sapphire Reserve card for most travel purchases.
Another motivation for version 3 was the announcement about huge changes coming to Delta Amex cards. The version 3 spreadsheet includes all Amex Delta features and annual fees that kick in on Jan 30 2020. The previous version only included Delta Reserve cards, but the new spreadsheet includes the Delta Platinum cards as well.
Finally, the introduction of the Amex Green card was another motivator. I decided to include the $150 Green card in the Ultra-Premium analysis since its features seem targeted directly at the Sapphire Reserve card (see my analysis of the new card here). A number of people have told me that they are considering the Green card not as a replacement to the Sapphire Reserve, but as an add-on to their card collections. That’s counter-intuitive to me. In my mind the only exciting feature of the Green card is the $100 annual CLEAR rebate. Why would you pay $150 per year for a $100 feature? By adding the Green card to the spreadsheet, it is easier to make rational decisions about whether or not the Green card is a keeper.