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Reader Jay asked the following question on the “Ask Lucky” page of the blog:
I’m approaching the annual fee on my AmEx PRG card and I’m torn about what to do. On one hand, I am extremely displeased about them discontinuing the 15k bonus after $30k spend and I think $175 is a little on the high side. On the other, I easily put $30k of airfare on the card yearly do to business travel and the 3x bonus more than covers the fee.
My question is: is there a better (or comparable) card to put my airfare spend, or should I suck it up and continue with the AmEx PRG?
I also put airfare spend on the Premier Rewards Gold
I also have the Premier Rewards Gold Card from American Express, and for years have been putting my airfare spend on the card. It offers triple points on airfare purchased directly with airlines, which makes it the most rewarding card for “generic” airfare spend.
The catch is that the card has foreign transaction fees, so I only use it for US-dollar denominated airline tickets. For foreign airline tickets I use the Chase Sapphire Preferred® Card, which offers double points on airfare but doesn’t have foreign transaction fees.
The other downside to the Premier Rewards Gold Card is that it has a $195 annual fee, which does seem kind of steep. I’ve always been able to justify it since up until now you’ve received a 15,000 point bonus for any year in which you spend $30,000 on the card.
In other words, $30,000 of airfare spend earned you 105,000 Membership Rewards points.
The way I’ve always viewed it, the annual threshold bonus more than compensated for the annual fee, and the bonus categories on top of that were the icing on the cake. Unfortunately American Express is discontinuing that threshold bonus as of 2015.
So is it still worth keeping the Premier Rewards Gold for airfare spend?
Using the Chase Sapphire Preferred as a replacement?
I have both the Chase Sapphire Preferred and Premier Rewards Gold. Let’s assume that Membership Rewards and Ultimate Rewards points are roughly equally valuable (which I more or less believe to be true).
If you put $30K of airfare spend (as Jay does) on the Chase Sapphire Preferred you’d earn 60,000 Ultimate Rewards points, as opposed to the 90,000 Membership Rewards points you’d earn with the Premier Rewards Gold. At a value of 1.5+ cents per point (I’m being conservative here), the annual fee is still justifiable, in my opinion.
I guess that makes the breakeven point between the two cards ~$12,000 of airfare spend (since you’d earn 24,000 Ultimate Rewards points vs. 36,000 Membership Rewards points, and I value those 12,000 points at $180+).
Switching to another American Express Card instead?
While the Chase Sapphire Preferred® Card is the best non-American Express replacement, in my opinion, what’s the best “generic” American Express replacement?
I’d say probably the The Amex EveryDay® Credit Card and Amex EveryDay® Preferred Credit Card from American Express. Even though these cards don’t offer spending bonuses for airfare, they offer 20% and 50% more points when you complete a minimum number of transactions per billing period.
For example, with the latter you earn 1.5 Membership Rewards points per dollar spent when you make 30 transactions per billing period. So that’s a difference of 1.5 Membership Rewards points per dollar spent compared to the Premier Rewards Gold. The annual fee is also lower. So at a value of 1.5 cents per Membership Rewards point, you’d need to spend ~$5,000+ on airfare to break even.
Using airline specific cards
Obviously the most common cards to have airline category bonuses would be the airlines’ own co-branded credit cards. Even so, virtually none of them are more compelling than the Premier Rewards Gold, while few of them are more compelling than the Chase Sapphire Preferred.
One exception that immediately springs to mind is the Alaska Airlines Visa Signature Card, which offer three Alaska miles per dollar spent with a low annual fee. If your primary airline is Alaska, that’s a great option, as I do value Alaska miles at least as much as Membership Rewards points.
The Premier Rewards Gold continues to be really compelling for airfare spend, assuming:
- You spend a lot ($10,000++) on airfare per year
- Most of your airfare purchases don’t incur foreign transaction fees
- The airline you primarily fly doesn’t have a great co-branded credit card
Otherwise there’s something to be said for the convenience of just always using the Chase Sapphire Preferred® Card:
- It doesn’t have foreign transaction fees, so you can use it for all airfare purchases
- The double points don’t just apply for airfare purchased directly from an airline, but also to airfare purchased through an online travel agency
What do you think? Does the Premier Rewards Gold Card dropping the annual threshold bonus change the value proposition of using the card for airfare? Which card do you use for airfare spend?