It seems like a crazy question given so many rewards credit cards have gone to no annual fee. But two credit cards–including one very new credit card—ask prospective members to shell out over $400 a year to carry them. So I ask, do those annual fees simply provide card members with the “prestige” of carrying some very expensive plastic, or do they entitle you to worthwhile benefits?
The original $450-a-year credit card is The Platinum Card® from American Express. Actually, it’s not a credit card at all, but a charge card. The difference? With an AMEX charge card, you must pay the balance in full every month or risk having your account shut down. The newcomer to the ultra-pricey credit card market is the $495-a-year Visa Black Card issued by Barclay’s Bank. Interestingly, both cards offer almost identical benefits.
So, what does paying $450 or $495 a year for a credit card get you?
- Rewards for every $1 spent
- 24-Hour Concierge Service
- Access to VIP airport lounges worldwide
Whichever way you slice it, these cards’ rewards programs are no better than average no-annual fee rewards credit cards. The American Express Membership Rewards program is as good as points-based rewards programs get (you can exchange points for cash, travel, or merchandise) but isn’t as valuable as, say, a card that gives you 1% cash back. An initial look at the Visa Black Card’s rewards system indicates it’s comparable to Membership Rewards, but no better.
But these cards do offer a few things other cards don’t. The 24-hour concierge service is certainly useful for the extremely busy and frequent travelers. Basically, it’s like having a secretary on hand to make your dinner reservations, send flowers, or change your flight.
Next up is the airport lounge access program. This is where, in my opinion, there is some value in these cards—to certain people. The cost of annual membership in any one airline’s club access program can reach $400. These cards get you into most of these clubs (which provide complimentary drinks, snacks, business services, and access to airline staff who actually care about you). For example, The Platinum Card® from American Express gets you premium travel benefits: you can access over 600 lounges worldwide with Priority Pass™ Select. There are also no foreign transaction fees, and you can bypass airport arrival lines with Global Entry. So, if you travel enough and want to use these services, one of these cards will actually save you money over purchasing access to more than one airline club.
Finally, there’s the prestige factor. In certain circles, some people might notice the card and think you’re a big wig. Of course, most people won’t give two hoots. The Visa Black Card, however, is actually designed to help you show off—it’s made of carbon instead of plastic.
Paying more than $400 for a credit card probably seems ridiculous to some, although I predict that as the government takes steps to restrict how credit card companies charge interest rates and fees, we’ll see more cards tack on annual fees. Not only will the fees help the companies earn revenue they lose in interest and other fees, but they will ensure that the customers are willing to pay for their services. And there’s something to be said for that—customers willing to pay a little more end up being more loyal and more profitable in the long-run. In exchange, those customers may just get better service from their card companies than the rest of us.
What do you think? Do you pay an annual fee for your credit card and feel it’s worth it? Do you think big annual fees are ludicrous? Let us know in a comment.
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.