Denice R. Preston
Will the benefits you enjoy with credit cards be worth the annual cost? We can help. We’ve designed The Total Benefit Value, which estimates the potential value you can obtain from a particular credit card based on the benefits it can provide. Editor’s Note: Intuit Credit Karma receives the cost of third-party advertising. However, it doesn’t impact the editorial opinions of our editors. Our third-party advertisers do not have the authority to review, approve or support any of our content editorially. It’s valid to the extent that we can tell when it was published.
Premium rewards cards have many possibilities
Yes, the enormous annual charges could cause some pause. However, the benefits that could be derived from them often exceed the cost in a significant way. In the end, there’s an explanation for why I pay over $3,000 annually for a quarter of a dozen high-quality rewards cards. It’s a cost to enter — and it grants the cardholder access to over $17,000 of rewards and perks.
Like you, I was skeptical about how much I spent on premium reward cards. That’s why I came up with the idea for a Total Benefit Value. It calculates the possible value of the premium card’s benefits in dollars to determine whether the annual cost is worth it.
To make this calculation more complete to complement it, we have also created an ease-of-use index to gauge how difficult it could be to withdraw from the card’s advantages.
What’s the Total Benefit Value, and how does it work?
“The total benefit value” is a rough estimate of the amount a premium rewards card’s benefits can be worth.
Consider it as a point of departure. That’s how much the card could have value if you and your traveling companion use each benefit only once. If you use the benefits more often, it could earn you an additional discount. You might get less value if you don’t use all the help.
It’s your responsibility to decide how often you’ll use these benefits. We cannot predict the benefits someone might use, so our goal is to present a base that demonstrates what’s possible. In this way, you can assess the total value of a card against the annual cost and decide if it’s worth it.
How is the total benefit value of a card affect it?
The initial sign-up bonus is the first thing I consider when considering the possibility of a new credit card.
This is the most exciting aspect of receiving a new rewards card. For me, the brain is racing as you consider all the destinations you can visit with the newfound wealth of credit card miles and points.
The issue is that you can only get the welcome bonus only once. What will happen after the first year after your honeymoon with credit cards has ended? Is it still your love for your card? Are you thinking about changing your mind?
This is why the total benefit value comes into. The dollar value is the continuing value of credit card advantages and perks that will let you know what value you can extract each year.
Which benefits count towards the total benefit value?
The most important thing about premium rewards cards is the perks they are designed to provide. The benefits that are ongoing come in various kinds.
High-end rewards credit cards generally provide airport lounge access and credit on statements for dining, travel, and other spending.
Specialized credit cards for airlines may offer flight credits discounts on award airfares, tickets for companions, and complimentary upgrades to first class.
Similarly, hotel premium rewards cards could give you complimentary nights, hotel credits, or elite status, which grants you access to perks such as room upgrades or late checkout.
These are just a handful of the top benefits we added to the total benefit value.
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Which method did you use to arrive at the value of the Total Benefit?
“The total benefit value” is a comprehensive analysis of all benefits we can reasonably estimate, except for rewards. The emphasis should be on core benefits and perks rather than miles or points.
We also included estimates of essential benefits that provide a set amount, like statements credits for travel and dining.
We came across regular benefits you can avail of whenever you like, such as free checked bags or priority boarding, based on the assumption that the cardholder and one travel companion would only use every benefit once a year.
However, some benefits are so vague — and some fluctuate so widely that it’s impossible to put a dollar value on them without making assumptions. We also excluded temporary benefits available at a time, such as credit for one-time statements and free memberships that start charging immediately following your first calendar year. To be eligible, it has to be a continuous benefit that can be accessed for another year.
We’ve outlined what we thought of for each kind of premium credit card.
Airline Premium rewards card
The other premium reward cards can be linked to popular airline rewards programs. We figured out the total benefit value for six premium airline rewards cards.
Alongside the standard benefits mentioned above, we calculated the value in …
Complimentary tickets permit a friend and family member to fly alongside you for a fee of almost nothing.
Upgrades to seats give you free access to seats in first class when they are available at the price of the regular main cabin ticket.
Discounts and flight credits refund a percentage of the miles you have spent on award flights.
No-cost checked baggage prior check-in, prior screening, priority boarding, and Priority baggage handling will save you money on costly costs for airlines.
What wasn’t included?
Discounts on purchases in-flight We are still determining how much each passenger will pay.
Seat upgrades are available only to frequent flyers who have loyalty status as they aren’t only available to cardholders with loyalty status.
Southwest Airlines offers two checked bags for free and its non-payment of change charges. They’re benefits provided by the airline and not by the issuer of credit cards.
