Do you love traveling like money expert Clark Howard?
If so, you may be considering a premium travel credit card with a high annual fee.
These can be your ticket to luxurious lounge access and travel upgrades, but they can also be a potential money pit with annual fees climbing to as high as $900 per year.
Though Clark carries a few of them in his wallet due to his volume of travel, he has long cautioned against the average consumer weighing themselves down with exorbitant annual fees for benefits that may be more aspirational than practical.
So how do you know if you’re a candidate for one of these cards?
In this article, I’ll walk you through Clark’s three boxes that he wants you to check before applying for one of these cards.
Clark Howard’s 3 Boxes to Check for Premium Travel Credit Cards
During a recent episode of The Clark Howard Podcast, Clark addressed the changing landscape of premium travel credit cards.
These cards are increasing annual fees and redeemable credits in the process, hoping that you’ll find the value in the perks as an acceptable value for the rising cost of carrying the card.
Within that episode, Clark laid out three boxes you should check before you consider paying for one:
“Check these three boxes for the premium travel cards: For the top two in cost, Sapphire Reserve and Amex Platinum, you can’t justify those fees unless you travel a lot, you like to travel more premium and you have a large charge volume. Otherwise, they are flat out not worth it anymore.”
Try answering these questions honestly before proceeding.
1. Do You Travel Often Enough?
If you’re not in the airport multiple times per month, you may not be traveling enough to consider paying for a premium travel credit card.
Clark has these cards in his wallet, but keep in mind he averages between 25 and 30 trips per year between his business and leisure travel.
“Typically, it’s for corporate travelers who are not paying for their own tickets,” Clark says. “They use the card and redeem the points for their personal and family travel.”
2. Do You Have ‘Premium Tastes’ for Your Travel?
Beyond the points multipliers and “coupon book” style statement credit opportunities, most of the value in these cards comes from the premium travel perks.
Many major travel cards offer airport lounge access. They also offer you boosted tier status with various airlines and hotel chains, providing you with a better chance at benefits like seat and room upgrades.
We all love a nice upgrade.
But if you don’t have a strong desire to relax in an airport lounge, increase your chances of flying first class or bump your regular hotel room up to a suite, then you may find that these cards simply aren’t worth the hassle.
3. Do You Have a Large Enough Charge Volume?
Clark says that you not only need to be traveling often, but you also need to be spending quite a bit of money to make it make sense.
“You need to have a really high charge volume to make it work,” Clark says. “I’m talking about charge volumes of a minimum of $10,000 per month to make many of these [high fee] cards worth getting.”
The most likely candidates for reaching this level of spending are either wealthy individuals or people who are doing business-related spending with the credit card.
If you are a traveler who doesn’t quite find yourself meeting all of these parameters, or perhaps are shying away from the annual fees, you may be a candidate for the Capital One Venture X Rewards Credit Card.
This card has a more palatable annual fee, which can be quickly offset by taking advantage of an annual $300 travel credit and an anniversary points bonus worth up to $100 in travel.
What If You Don’t Check These Boxes?
There’s nothing wrong with that.
In fact, I don’t check Clark’s boxes for these cards myself.
Clark encourages consumers who are not extreme travelers to instead focus on maximizing cash back earning opportunities with their credit card spending.
He recommends starting with a credit card that earns you an unlimited 2% cash back on all purchases with no annual fee. That way, you effectively get 2 cents back on every dollar that you spend, regardless of what you’re spending it on.
From there, you can work to build your returns up to as much as 5% cash back by getting other no annual fee cards that give bonus rewards on spending categories that you use most often.
Clark says co-branded credit cards from retailers like Amazon, Walmart and Target are a “no-brainer” for people who shop in those ecosystems, for example.
But there are more generic opportunities to earn better than 2% cash back with cards that boost spending categories like dining, gas and groceries, too.
Team Clark has a cash back credit card tool to help you determine which cards may be your best option based on your personal spending habits.
Do you have a premium travel credit card? Do you check Clark’s boxes for having one? We’d love to hear about your experiences and strategies in the Clark.com community.
To see the rates and fees for the American Express cards featured, please visit the following links: American Express Platinum Card®: See Rates and Fees.
