The Couponing of Travel Credit Card Benefits
Does your ability to use travel credit card benefits match the hype of card issuers?
For the past few weeks, we have offered a series on credit card families (i.e., families of co-branded airline or hotel cards and families of cards that generate flexible points). We are taking a brief break from posting about credit card families. This post is related to the topic of card families as credit cards that offer more benefits often take what we call a “couponing” approach. We will return to the series on credit card families later this week.
When I look at some credit card offers these days, I am reminded of those Entertainment Coupon books that middle schoolers sold for fundraisers. As I recall, the books would cost $20 or $25 and promise hundreds of dollars’ worth of discounts with dozens of local restaurants and other businesses. I would always buy them because it was a fundraiser, and I wanted the kids to be able to go on their class trip. After purchasing the books, I would find the discounts to be of some value – certainly enough to cover the cost of the book – but never worth the significant savings that was suggested.
Credit cards issuers are ratcheting up the “couponing” approach to benefits. Many cards appear to be quite loaded with enticing benefits but, upon closer inspection, are offering benefits that are difficult to fully realize without considerable effort or changes in spending practices on the part of the cardholder.
Based on my personal experience, and an ongoing review of card offerings, I would deem the American Express Platinum card as the “King of Couponing.” The application page for this card boasts “You can get over $1,500 in value” each year. Benefits include a $200 hotel credit, a $200 airline fee credit, a $155 Walmart+ credit, a $240 digital entertainment credit, a $200 Uber credit, a $300 Equinox health club credit, a $189 CLEAR credit, and a $100 Saks Fifth Avenue credit.
Some quick math shows that you “can” get over $1,500 in value. But, it is highly unlikely that you will get this amount of value.
- The hotel credit requires at two-night minimum stay at a select group of luxury or resort properties, and you must book them through American Express’ travel services.
- The airline fee credit covers incidentals like bag fees, inflight beverages, or seat upgrades. You must choose one domestic airline at the beginning of the year and use the credit with only that airline.
- The digital entertainment credit is limited to $20 per month.
- The Uber credit is limited to $15 per month (exc. December which is $35).
- The Saks credit is limited to $50 during each half of the year. If you are shopping online, they slap on a $30 delivery charge, so you are not getting much from Saks unless you spend more than the $50 credit.
American Express cards appear to be the leader in the couponing game. The Amex Hilton Surpass card recently increased its annual fee from $95 to $150. This makes the Surpass an expensive mid-tier hotel card especially given that it does not offer a free room each year like some of the competing sub-$100 cards. However, the “refreshed” Surpass card now offers a $200 Hilton credit. However, the credit is broken into $50 per quarter. So, you must stay at Hilton properties four times per year, and one stay in each calendar quarter, to receive the full $200 benefit.
American Express is not the only card issuer doing this. The Citi Aadvantage Executive World Elite card will provide holders of this $595 card with $120 in credits for the Lyft rideshare service. These credits are dispensed at $10 per month for months where you use Lyft at least three times. Another way of looking at it is that you can maximize this benefit and get the full $120 credit if you take Lyft 36 times spread out evenly over 12 months ($3.33 per ride).
Although credit card issuers often overstate the real-world value of card benefits, and that “couponing” has increased, every client we have worked with is unique and many can benefit from a card’s array of benefits (even if the benefits are overstated and difficult to obtain for other clients). In fact, we have one Amex Platinum card in the Optimizer household. When renewal time rolls around, we do some “back of the envelope” calculations to see if we want to pay the steep annual fee for another year.
- We believe we use most of the $200 Uber credit since the Optimi-daughter uses Uber a lot.
- We have signed up for Walmart+. It is not worth $13+ a month to us but we get some value out of it once or twice a year.
- We tend to use most of the $240 digital entertainment credit.
- We use most of the $200 airline credit through seat upgrades and baggage check fees.
Ms. Optimizer and I fly enough to get in several airport lounges visits each year and especially like having access to Delta lounges and Amex Centurion lounges. In sum, we are at least getting value that equals the annual fee. However, another COVID-like situation or a slow air travel year would make this card a money loser for our household.
When creating a Travel Rewards Optimizer plan for you, we sometimes factor in the potential benefits of a card and the likelihood that you can use them. But, rather than thinking about the potential value of benefits, we try to think in terms of their realistic, ongoing usefulness to you and spell it out clearly in the plan.
The main thrust of Travel Rewards Optimizer plans is to set you up for accumulating points and miles so you can achieve free and reduced cost travel as quickly and efficiently as possible.
We are ready to help you turn your routine credit card spending into the travel of your dreams.
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E-mail: frank@travelrewardsoptimizer.com
DISCLAIMER: I am not an investment advisor, financial planner, tax professional or legal professional. The projections provided in my plans are based on good faith estimates and client supplied information. I can not guarantee that credit card issuers will approve the applications of my clients. Credit card offers, loyalty program policies, and bank policies are subject to change over time.