Nowadays many premium credit cards (with steep annual fees) have travel credits of some sort, which can help offset the annual fee. In this post I wanted to rank these credits based on their ease of use, and also discuss why card issuers offer these credits to begin with.
In this post:
Why do many premium credit cards have travel credits?
One common question is why many premium credit cards have annual travel credits, rather than just having lower annual fees. For example, the Chase Sapphire Reserve® (review) has a $550 annual fee and offers a $300 annual travel credit. So why doesn’t Chase just get rid of the travel credit and lower the annual fee to $250? There are a few reasons:
- Card issuers don’t want to cannibalize their own card portfolio, as issuers go after different consumers with different price points; for example, the Chase Sapphire Preferred® Card (review) has a $95 annual fee, so a major annual fee difference is one way to differentiate these products, even if much of that fee can easily be recouped
- Issuers want people to love their cards and have them at the front of their wallets; a travel credit makes it more likely that you’ll spend money on the card and keep it readily available, especially with an easy to use travel credit
- There’s often some breakage on these credits; probably not much with the Chase Sapphire Reserve, but for those credits that are harder to use, there are definitely a lot of people who don’t use their credits
The best credit card travel credits
With the above out of the way, let me rank the travel credits offered by some of the most popular premium credit cards. This ranking is based on how easily the credits can be used, rather than how big they are.
First I’ll be listing the “generic” credits (not specific to just one travel brand), and then I’ll be listing the brand-specific credits. Also note that I’ll only be listing cards that are open to new cardmembers, so this excludes products like the Citi Prestige Card and Ritz-Carlton Credit Card.
1. Chase Sapphire Reserve $300 travel credit
The Chase Sapphire Reserve® (review) offers a $300 annual travel credit:
- This is offered every cardmember year
- There’s no registration required to use it
- The credit will automatically apply toward any purchase coded as travel, including flights, hotels, rental cars, rideshares, taxis, trains, and more
It doesn’t get easier than using the Chase Sapphire Reserve travel credit, as this is truly “no strings attached.”
2. Capital One Venture X $300 travel portal credit
The Capital One Venture X Rewards Credit Card (review) (Rates & Fees) and Capital One Venture X Business (review) (Rates & Fees) each offer a $300 annual travel credit:
- This is offered every cardmember year
- There’s no registration required to use it
- The credit can be applied toward a purchase at the time of booking through the Capital One Travel Portal, including for flights, hotels, and rental cars
While not as straightforward as the credit on the Chase Sapphire Reserve, I still find find this to be easy enough to use. I simply book a $300+ flight each year through the portal, and that get $300 off at the time of booking. Easy peasy.
3. Hilton Aspire $200 flight credit
The Hilton Honors American Express Aspire Card (review) offers up to $200 in annual flight credits:
- This is offered every calendar year
- This is a quarterly credit, so you receive a $50 credit each quarter
- There’s no registration required to use it
- Just spend at least $50 per quarter on airfare either directly with an airline or through amextravel.com, and you’ll automatically be reimbursed $50
This credit is easy to use, much easier than the typical Amex airline fee credit. The catch with this credit is that you’re capped at $50 in credits per quarter, which is a fairly low threshold. Then again, with airlines having flexible booking policies nowadays, you can always just book a flight and then bank the credit.
The information and associated card details on this page for the Hilton Honors American Express Aspire Card has been collected independently by OMAAT and has not been reviewed or provided by the card issuer.
4. Amex Platinum $200 hotel credit
The Platinum Card® from American Express (review) offers a $200 annual hotel credit (this isn’t available on the business version of the card):
- This is offered every calendar year
- This is only valid for pre-paid hotel stays booked through Amex Fine Hotels & Resorts (no minimum stay) or The Hotel Collection (two night minimum stay required)
- There’s no registration required, but rather this will automatically be applied toward the first eligible transaction
While there are some limitations in terms of the types of hotels you can book, the credit is otherwise really easy to use.
5. BofA Premium Rewards $100 airline incidental credit
The Bank of America® Premium Rewards® credit card (review) offers a $100 annual airline incidental credit:
- This is offered every calendar year
- There’s no registration required to use it
- This can be used for purchases with select US airlines, excluding Allegiant, Spirit, and Sun Country
- The credit is intended to be used for incidental purchases, including preferring seating upgrades, ticket change and cancelation fees, checked bag fees, in-flight entertainment, onboard food and beverage charges, and airport lounge fees; unofficially, the credit seems to work on even more kinds of purchases
Ultimately the reason you get this card is because it’s one of the most rewarding cards for everyday spending, in conjunction with the Preferred Rewards program. This credit can help offset the annual fee, and anecdotally is quite easy to be used for all kinds of purchases.
6. Amex Platinum $200 airline fee credit
The Platinum Card® from American Express (review) and The Business Platinum Card® from American Express (review) each offer a $200 annual airline fee credit:
- This is offered every calendar year
- Cardmembers must register with a designated airline each year, with the choice of Alaska, American, Delta, Frontier, Hawaiian, JetBlue, Southwest, Spirit, and United
- The credit is intended to be used for airline fees, and excludes airline tickets, upgrades, mileage points purchases, gift cards, duty free purchases, and award tickets
While I manage to max this out every year, I do find this to be the most difficult airline travel credit to use, given the need to designate an airline, plus the restrictions on redemptions.
7. Hilton Surpass $200 Hilton property credit
The Hilton Honors American Express Surpass® Card (review) offers up to $200 in annual Hilton property statement credits:
- This is offered every calendar year
- This is a quarterly credit, so you receive a $50 credit each quarter
- There’s no registration required to use it
- The credit will automatically apply toward your first $50 in spending at any eligible Hilton property globally; this includes both hotels and resorts, unlike the Hilton Aspire Card credit, which only applies at resorts
Assuming you stay at any Hilton property at least once per quarter and spend at least $50, then this credit is really easy to use. It also makes the card’s annual fee really easy to justify.
8. Hilton Aspire $400 Hilton resort credit
The Hilton Honors American Express Aspire Card (review) offers up to $400 in annual Hilton resort statement credits:
- This is offered every calendar year
- This is a semi-annual credit, so you receive a $200 credit in January through June, and a $200 credit in July through December
- There’s no registration required to use it
- The credit will automatically apply toward your first $200 in spending at any eligible Hilton resort globally (this only includes resorts and not hotels, and you can find all resorts at this page)
This credit is easy to use, with the major restriction being that it’s only valid at resorts, and not non-resort hotels. The other restriction to maximizing the up to $400 in credits is that you’d have to stay at a Hilton resort at least once every six months.
The information and associated card details on this page for the Hilton Honors American Express Aspire Card has been collected independently by OMAAT and has not been reviewed or provided by the card issuer.
Bottom line
Nowadays many premium credit cards offer annual travel credits. This is a way for card issuers to give cardmembers value, and encourage people to keep cards front-of-wallet. While I think there’s value to be had from all credits, not all credits are created equal, as you can tell. Hopefully the above is a useful rundown of the relative value of these credits.
Which credit card annual travel credits have you used?
The best ones are the Reserve and the BofA ones since they are most flexible. The worst one is the Platinum as it is airline specific and pretty difficult to use. There are several other cards that offer a travel credit not listed.
Ritz-Carlton card.
Easiest (perhaps in line with Chase in number 1) is one Ben never mentions - US Bank Altitude Reserve, the first $325 after renewal auto credits for any travel or dining purchases (the latter is since COVID). I don't even think about those credits, they just show up on my statement, and earn points on the spend.
Bank of Ameruca excludes Breeze airways as well
It is possible to max out the Aspire credit with one resort stay every 18 months or so. For example, today you could book a resort stay for next year after July 1 (not on a prepaid rate). Call the hotel before late December and say you'd like to make a prepayment on the folio and pay $200. The charge is from the hotel's front desk, so it will trigger the credit for 2023H2. Repeat...
It is possible to max out the Aspire credit with one resort stay every 18 months or so. For example, today you could book a resort stay for next year after July 1 (not on a prepaid rate). Call the hotel before late December and say you'd like to make a prepayment on the folio and pay $200. The charge is from the hotel's front desk, so it will trigger the credit for 2023H2. Repeat before late June to trigger the 2024H1 credit. The balance of your stay, triggering the 2024H2 credit, gets paid at checkout. Better than 99% chance that the hotel goes along with this; you might need to be transferred from the front desk to sales to make it happen. It's not risk-free: the hotel could go under (though in that situation, you're not actually out anything; you might not want the hotel refunding you and triggering a clawback).
A similar approach can be used with the Surpass credit: it's plausible to get full value ($250 or 5 quarters' worth) with 1 stay every 15 months or so.
Could stretch this out more by moving stays forward, though that's likely over-egging this pudding.
Levi, do you think it would show up as an incidental charge or as a room charge? I'm traveling on points so I'm not sure how that would play out.
The Aspire and Surpass credits are against any charge made by the hotel property management system, which is what will encompass room rate and incidentals which are added to the hotel bill.
I am just surprised people are ready to jump through so many hoops to claw back the AF. Just find another card. At some point of time you have to factor in the cost of time and effort you put to claw back the AF.
"It doesn’t get easier than using the Chase Sapphire Reserve travel credit, as this is truly “no strings attached.”"
There actually are some strings attached to the CSR travel credit. Unlike Amex credits, you don't earn any points for purchases covered by the travel credit. It's a huge hassle to deal with refunds (e.g., airline tickets) because Chase claws back points that you never earned in the first place. IMHO, Chase should award points on...
"It doesn’t get easier than using the Chase Sapphire Reserve travel credit, as this is truly “no strings attached.”"
There actually are some strings attached to the CSR travel credit. Unlike Amex credits, you don't earn any points for purchases covered by the travel credit. It's a huge hassle to deal with refunds (e.g., airline tickets) because Chase claws back points that you never earned in the first place. IMHO, Chase should award points on all purchases, even those covered by the credit. If other CC companies can (afford to) do it, so can they.
I personally don't find the Amex hotel credit valuable. I've tried to use it several times, and find I'm always able to simply book a less expensive hotel for much less than the FHR hotels. It seems to me it's really only useful for people who stay at luxury hotels in major cities. I'd almost always rather spend the money on other things.
You forgot Citi Prestige. Still offers $250 airline credit
There's no commissions for Ben on getting someone to sign up for the Prestige, so that card is dead to him.
Citi Prestige is dead to all of us who don’t have it from when it was last available years ago….
Head's up - AmEx removed Frontier as a possible airline for the fee credit last year for the AmEx Platinum card.
Just amazing. One of two airlines where ancillary fees are impossible to avoid, so Amex just removed it.
Apart from the first 2 credits, the rest are credits only a coupon clipper who travels a heck of a lot will be able to take full benefit of.
I would be surprised if 90% of the cardholders are able to take full benefit of the last 8 travel credits.
Totally agree. I travel a lot but I'm not going out of my way to stay at a Hilton each quarter just to get $50 back on my statement. "Coupon clipper" is the perfect term for those perks.
Until recently, Capital One had issued an IRS Form 1099 for the travel statement credit. Of course, cardholders have been unhappy. But, recently, Capital One changed it from a statement credit to a discount on a portal purchase. Maybe this sounds like semantics but it might be what Capital One's tax attorneys wanted in order to discontinue the 1099s.
When Capital One was issuing 1099s for travel statement credits, they were issuing them in error unless the terms of the travel statement credit were materially different in some respect from travel credits as implemented by other card issuers, such as Chase or American Express.
From an accounting and tax perspective, the travel statement credit as currently implemented by Capital One is in essence a coupon that is applied against the gross cost of travel...
When Capital One was issuing 1099s for travel statement credits, they were issuing them in error unless the terms of the travel statement credit were materially different in some respect from travel credits as implemented by other card issuers, such as Chase or American Express.
From an accounting and tax perspective, the travel statement credit as currently implemented by Capital One is in essence a coupon that is applied against the gross cost of travel at the time the travel is purchased, i.e., a reduction in the selling price; because gimmicks such as coupons simply reduce the price of a good or service, no taxable transaction arises when a customer redeems them.
The travel statement credit as implemented by Chase is a rebate because the buyer initially pays the full cost of the travel service and is then issued a statement credit (rebate) at some point in the future; as Chase has structured their travel credit, it's essentially a rebate which reduces the price of the service and again, from the buyers position, no taxable transaction has arisen. The statement credit (rebate) as implemented by Chase is no different than, for example, a rebate on a motor vehicle or a refrigerator, which are not taxable.
My understanding as to why Capital One changed from a statement credit as Chase does to, in essence, a coupon redeemed at the time travel is purchased is because some bright spark found a loophole in Capital One's system which would allow a cardholder to buy travel through the Capital One travel portal, get the statement credit, and then cancel the travel; Capital One's system was not removing the credit when the travel was cancelled, in essence converting the travel credit to a credit that would offset other non-travel purchases.
And one other thing to keep in mind - referral bonuses for referring someone to a credit card ARE taxable and issuers should send a 1099 if an individual cardholder exceeds USD 600 in referral bonuses because the referrer is, in simple terms, performing a service for the bank by acting in a sales capacity and helping to market its cards.