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
- Prestige?
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.
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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.
About David E. Weliver
If the “Black Card” will get you into the major air carriers lounges then for anyone traveling international and especially Asia should grab it. Making 10 trips per year means an extra $40 per trip for lounge access. I’ll pay it. My question is do they list the airlines and airports that this applies?
I think it really depends on the individual. For someone that travels a lot, that black card can come in handy. But, is it necessary? Probably not. And could the credit card companies get away with charging more? Probably. If your going to pay $400, you’d probably also pay $600.
For the average joe, $400 is probably too much to just have the opportunity to hold the card. They’d rather opt for the no annual fee with minimal perks.
I have never payed an annual fee and to be perfectly honest, if a card started charging me annual fees, they’d quickly lose me as a customer.
I’m not 100% positive about this, but don’t most credit card revenues come in from charging merchants their service fee, instead of charging customers interest? For every transaction anyone charges, about 1-2% goes straight into the credit company’s wallet. I’d imagine that’s a much bigger payoff overall than charging delinquent accounts interest.
Regardless, I think there will continue to be free options. For me, a card is just easier, quicker and safer than cash. The bonus rewards are just that, a bonus. If I had to choose between free and bonus rewards, free would win out, unless I was getting 1% back on every dollar I spend and my fee was much much lower than that (maybe $25 max?).
Being a “bargain crusader,” I will never pay an annual fee for the use of a credit card, as long as a free one exists out there. I agree with Samir, in that bonus rewards are just that, a bonus. Most of the visitors to this website (and I hope I’m not generalizing) are not in a financial position to be paying $400+ a year for credit cards that boast access to airport lounges and “prestige.” Maybe someday when I’m a CEO and the “prestige” matters, I’ll think about it, but most likely not even then. I’ll stick with my run-of-the-mill FREE Mastercard and their rewards points…
While I don’t have a Platinum card, I do have a Gold AmEx card that I love. The annual fee for it is a more reasonable $150 a year. The one thing that I like about the service American Express provides is their fraud protection. AmEx does not put up with vendors who cheat customers or fraudulent card activity. You get your money back right away while they investigate unlike Visa or Mastercard which are more on the merchants’ sides. You can say whatever you want about other cards having the same, but it’s not true. I like paying for AmEx’s pitbull attitude and tenacity on protecting its card holders.