Rewards, Credits, Perks, and Fees

What do credit cards offer you?

Many credit cards offer benefits to users in order to attract and retain users. After all, the credit card companies don’t make any money if they don’t have any customers. So what benefits do they offer? Most of these benefits fall into the category of rewards, credits, or perks.

Rewards

Credit card rewards are the points/cash back that many credit cards offer. This can be something like “3% cash back in grocery stores” or 4 points for every dollar spent in restaurants.” For more info on rewards, check out the post about it here.

Credits

Some credit cards also offer statement credits. Statement credits may be spending-based (spend $500, get $50 back) or store-based (get a $200 annual credit when you book a hotel through the Amex Travel portal). When I am evaluating a credit card, I usually figure out how much I can save with the credits that I will use in my normal life without having to jump through too many hoops like spending too much money or shopping at some random place.

Perks

Some credit cards (usually higher tier cards) also offer perks. These perks usually are harder to value than the credits and cash back because there is rarely a dollar amount attached to them the way that there is with credits and cash back. For example, some cards come with access to airport lounges. With a perk like this, you’ll have to consider things like whether there is a lounge in the airports that you frequent, how often you travel and will be using the lounges, and how much the lounge means to you. When I was flying from Australia to New York, having lounge access during a 10 hour flight delay (which allowed me to shower and get a fresh meal) was worth every penny and then some. However, if you primarily fly short routes between small airports, lounge access may not be worth much to you.

Fees

Many credit cards charge annual fees. These range from $95 for the Chase Sapphire Preferred or the Capital One Savor to $695 for the Amex Platinum. The Amex Centurion card (an invite-only card for high net worth individuals) comes with an eye-watering $5,000 annual fee. When considering whether a certain card is right for you, the annual fee can make a big difference in that decision.

How I Evaluate a Credit Card

When I am trying to figure out if I should get a particular credit card, I gather up all of the information that I can on the card, such as rewards, credits, perks, and fees. I start by comparing the annual fee to the credits and perks to see how much value I am getting out of the card versus how much I am spending. I also compare the rewards categories with how much money I spend on those categories.

For instance, I was looking at the Hilton Aspire card recently. The Aspire card offers a free night, $250 Hilton statement credit, a $250 airline fee credit, and Diamond status with Hilton (which offers things like access to their executive lounge, late checkout/early check-in, and room upgrades). The card comes with a $450 annual fee, and offers 14 points per dollar spend at Hilton hotels, 7 points on flights, dining, and car rentals, and 3 points everywhere else.

The rewards categories aren’t awful, but I have other cards that offer better rewards points on every category besides Hilton, which is not a huge portion of my spending. So far, not interested in the Aspire.

The credits and Diamond status, however, were a different story. By using the credits alone, I can save $500, making the card worth its annual fee. In addition to this, I can save hundreds of dollars with the free weekend night (depending on the cost of the hotel where I use it). I also get more comfort when I stay at Hilton hotels via the room upgrades and lounge access. As an added bonus, I can combine the 14 points per dollar that I get for having the Aspire card with the 20 points per dollar that I get for having Diamond status, and end up getting 34 points per dollar that I spend with Hilton, which translates to about 17% back. Not a bad deal at all.

In this situation, it is important to consider how often you’ll use the rewards that are offered. If I don’t use the airline fee credit or stay at Hilton, I end up shelling out $450 for nothing, which is definitely not ideal. However, if I do use at least the free night and the Hilton credit, I am covered.

It’s a lot to consider, and it takes some forward thinking and awareness. However, there are some options out there that offer tremendous value if they are a good fit for you.