Fee-based Credit Cards: Are They Worth It? Part One

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In other posts we’ve talked generally about the different kinds of fee-based credit cards we use that allow us to gather points and miles to travel the way we like. All that’s still true, but let’s use a specific example and break down the fee, what we get for it, and why we see enough value to fork over the money.

The Annual Fee

One of our newer credit cards is the United Club Mileage Plus Infinite credit card, issued by Chase. Okay, let’s get this out of the way from the start: it has an annual fee of $525. Ouch, right? Well, maybe. Let’s talk about this and how we utilized it on our last trip.

Perk #1: No Baggage Fees

Okay, yes, we’ll admit $525 is a lot of money for a credit card, especially when there are plenty of other cards that don’t cost you anything. However, keep in mind that, as with everything else, we aren’t giving Chase $525 each year for nothing. Instead, we expect something in return. This card has plenty of perks, but there are just a few we really focus on (for this card…other cards have other benefits that we like…different conversation). First are the checked baggage fees: we get up to two bags checked for our United flights, for free (Note: we know it’s not actually free, consider it pre-paid if you like). As far as we know (we rarely check bags), checked baggage fees can easily run you $50 per bag, so for two people flying that’s $100 each way. Keeping that in mind, our card’s annual fee just dropped from $525 to $425 (we didn’t check bags on the way to our last destination, just the way home – we care less about them being lost by that point).

Perk #2: Lounge Access

One of the other perks we really like about this card is that it gets us into the United Lounges at the airports (note, we’re not talking about their fancier Polaris lounges; those are only for people travelling in either Polaris Business Class or First-Class cabins – goals). Entrance to the United Lounge will set you back $59 per person per entry. Oh, that’s unless you have a card that’ll get you in gratis, like this one. That means what would ordinarily cost us $118 to visit the lounge is…already paid for. That annual fee now drops from $425 to $307 (remember: Annual Fee ($525) – Baggage Fees ($100) – Lounge Access ($118)). However, if you have a flight with multiple legs and you schedule them correctly, this can increase quickly.

Example: A Recent Trip Home from London

Take one of our recent trips to Europe as an example. On the way from Springfield to London, we had a layover in Denver. Fortunately, Denver has a Centurion Lounge (our preferred lounge experience), so we were able to head in to relax, grab some food and a drink, and connect to the Wi-Fi while we waited for our flight to board. Unfortunately, our Chase card doesn’t do us any good for the Centurion Lounges (but one of our AMEX cards does…different conversation), so we’ll skip to the return trip. When we came home, we went from London to Newark to Chicago to Springfield. Fortunately for us, London, Newark, and Chicago all have United Lounges, which as we said above, is one of the perks we get with our United credit card. Without the card, we’d have paid $118 per lounge (remember, $59 per person) for each of the three lounges we visited, or a total of $354 in lounge fees. Of course, we could have opted to stay out in the crowded terminal eating gross, overpriced airport food, and dealing with the general chaos while trying to relax and get some work done during our layover. And if that’s your jam, you do you. We prefer the quiet of the lounges, especially on our really long travel days. Oh, and don’t forget the bar. And the food. And the Wi-Fi. And way nicer bathrooms. And even…a shower if you want. Included. So, we were able to enjoy three meals (breakfast in London, lunch in Newark, and dinner in Chicago) and drinks all without paying (another) dime.

The Verdict

Okay, so if we add this up, we got into 3 different United Lounges (total value: $354) and had our baggage fees waived (total value: $100), for a total dollar value of $454. Keeping in mind that our annual fee for the card is $525, that dropped our effective annual fee to $71. And that was just on this one trip, only on the return. Had we been to a United Lounge on the way to London (rather than the Centurion Lounge), the card would have paid for itself with just this one trip. Imagine going on multiple adventures each year and you can see how a card like this can easily pay for itself a few times assuming you structure your travels correctly. We’ve used this card on two trips now since we got it in May and it’s more than paid for itself twice over. Plus, these are just TWO of the perks we get from this card – we’ll talk about more in the next post.

Caveats

A few things we should point out here. First, different people have different perspectives when it comes to travel preferences. For example, some folks want their travels to happen as quickly as possible with tiny layovers and jogs through the airport to catch your next plane. This probably means you want to minimize your time in airports and wouldn’t really have enough time to properly enjoy lounge access. If that’s a good description for you, then paying for a credit card that gives you access to its lounges might not make sense for you. Similarly, having this card and the perks it grants assumes you want to travel; if you don’t, then it doesn’t make sense to have a card like this. We are grateful that the lounges not only offer food options for our sometimes-tricky diet but also a (usually) quiet workspace between legs to catch up on emails, edit photos, schedule social, and write blog posts (like this one…written in the United Lounge in Newark) so we don’t lose entire workdays at a time while traveling.

Beyond that, not all airports have the same types of lounges. For example, like we said above, Denver has a Centurion Lounge (so does London), but Chicago and Newark don’t – yet. Chicago and Newark both have United Lounges (so do London and Denver). Of course, other airlines have lounges at different airports around the world, too. All that’s to say, if you’re going to spend the money on a card that gives you lounge access, that might mean you need to pay a little more attention to how you schedule your flights and what airports you have access to. For example, if we didn’t have the United card and its accompanying United Lounge access, we’d *only* have access to the Centurion Lounges via our AMEX card (Does that sound extra? We’re okay with it). In that scenario, we’d try to fly through Denver, Houston, Dallas, or Charlotte as much as possible, as they all have Centurion Lounges. It also means we’d look for layovers between two and three hours long, to give us enough time to get to the lounge and enjoy it, with enough buffer room in case our flight is delayed and to get to our next flight before they close the gate.

We should also point out that there are plenty of other perks that come with this credit card (like getting discounted prices on in-flight purchases and statement credits), we just don’t use them as much because they either don’t apply to how to live/travel or we get the same benefits from other cards. But there are others that apply like status with Hertz that give us discounts and upgrades on car rentals, primary car rental insurance so we can wave the insurance provided by the rental agency, enrollment credit for TSA pre-check and Global Entry (huge musts in our book), and no foreign transaction fees. We’ll break these all down for you in another post in a couple weeks.

Caveat Emptor

As before, we’re not suggesting fee-based cards are right for everyone. We pick cards that fit into our lifestyle and normal spending habits and give us perks that make travelling more enjoyable. Regardless of what kind of credit card you decide to use, we always encourage you to use them responsibly and to not overextend yourself.

What’s your favorite credit card perk? Leave us a comment to let us know!

Happy traveling!