When choosing a travel credit card, many factors come into play, including rewards, benefits, and, of course, annual fees. Understanding whether a card with an annual fee is worth it compared to one without requires a closer look at the value each card brings. Here’s an analysis to help you decide which option is best for your needs.
Factors to Consider
| Factors | No Annual Fee Cards | Annual Fee Cards |
| Rewards Rate | Moderate rewards rates (1-3%) on travel and everyday spending categories. | Higher rewards rates (up to 5%) on travel-related purchases, and may offer bonus points on other categories like dining and entertainment. |
| Sign-Up Bonuses | Smaller sign-up bonuses, often around $150-$300 in value | Larger sign-up bonuses, sometimes worth $500 or more in travel credits or points. |
| Travel Benefits | Basic travel protections, like car rental insurance and trip cancellation coverage. | Extensive travel perks, including airport lounge access, travel credits, complimentary hotel nights, and enhanced travel insurance. |
| Foreign Transaction Fees | no foreign transaction fees | no foreign transaction fees |
Examples of the Top 2 Travel Rewards Cards to Compare
| Card / Benefits | Capital One VentureOne Rewards Credit Card |
Chase Sapphire Preferred Card
|
| Annual Fee | $0 | $95 |
Rewards Rate |
* 1.25 miles per dollar on every purchase * 5 miles per dollar on hotels and rental cars booked through Capital One Travel |
* 5x points on travel purchased through Chase Ultimate Rewards * 3x points on dining, select streaming services, and online grocery purchases (excluding Walmart, Target, and wholesale clubs) * 2x points on other travel purchases * 1x point per dollar on all other purchases |
| Sign-Up Bonus | Earn 20,000 bonus miles after spending $500 in the first 3 months. This bonus can be redeemed for $200 in travel. | Earn 60,000 bonus points after spending $4,000 in the first 3 months (worth $750 toward travel through Chase Ultimate Rewards) |
|
Point Value |
Miles are generally worth 1 cent each for travel redemptions. | Points are worth 1.25 cents each when redeemed through Chase Ultimate Rewards for travel |
Travel Benefits |
* Travel accident insurance * Extended Warranty * Auto rental collision damage waiver * No blackout dates or seat restrictions on travel redemptions * Transfer miles to over 15 travel loyalty programs |
* Travel Protection * Extended Warranty Protection * Purchase protection * 25% more value when redeeming points for travel through Chase Ultimate Rewards * $50 Chase Travel Credit on account anniversary for hotel stays purchased through Chase Travel |
Cost-Benefit Analysis
To determine if a card with an annual fee is worth it, consider the following:
- Calculate Your Spending: Estimate how much you spend on travel and other categories that earn high rewards. Higher rewards rates can quickly offset the annual fee if you spend enough in those categories.
- Value the Benefits: Assess the value of the additional perks and benefits. For example, if a card offers $200 in annual travel credits and the fee is $95, you’re effectively gaining more value than you’re paying for.
- Consider Your Travel Habits: Frequent travelers may find the additional perks and protections of annual fee cards highly beneficial, whereas occasional travelers might not maximize these benefits
To evaluate which card best suits each spending scenario, let’s break down the benefits of the Capital One VentureOne Rewards Credit Card and Chase Sapphire Preferred Card based on your specified spending patterns.
Scenario Analysis:
Scenario #1: $1,200 Monthly General Spend, $15,000 Yearly Travel Spend
| Scenario #1 | Capital One VentureOne Rewards Credit Card | Chase Sapphire Preferred Card |
| General Spending: $1200 per month | $1200 x 12 months = $14,400 per year 1.25x miles: 14,400 x 1.25 = 18,000 miles |
$1200 x 12 months = $14,400 per year 1x points: 14,400 points |
| Travel Spending: $15,000 per year | Assuming travel not booked through Capital One Travel: 1.25x miles $15,000 x 1.25 miles = 18,750 miles |
Assuming travel not booked through Chase Ultimate Rewards: 2x points $15,000 x 2 points = 30,000 points |
| Total Miles / Points | 18,000 + 18,750 = 36,750 miles | 14,400 + 30,000 = 44,400 points |
| Travel Redemption Value: | 36,750 miles x 1 cent = $367.50 | 44,400 points x 1.25 cents = $555 |
| Annual Fee | $0 | $95 |
| Net Value | $367.50 – $0 = $367.5 | $555 – $95 = $460 |
| Extra Value – First Year | After spending $500 in 3 months, you get $200 in travel value with no fee, resulting in a net value of $200. | After spending $4,000 in 3 months, you get $750 in travel value minus the $95 fee, resulting in a net value of $655. |
| The Winner Is | Ideal for You? | Ideal for You? |
Scenario #2: $2,500 Monthly General Spend, $6,000 Yearly Travel Spend
| Scenario #2 | Capital One VentureOne Rewards Credit Card | Chase Sapphire Preferred Card |
| General Spending: $2500 per month | $2500 x 12 months = $30,000 per year 1.25x miles: 30,000x 1.25 = 37,500 miles |
$2500 x 12 months = $30,000 per year 1x points: 30,000 points |
| Travel Spending: $6,000 per year | Assuming travel not booked through Capital One Travel: 1.25x miles $6,000 x 1.25 miles = 7,500 miles |
Assuming travel not booked through Chase Ultimate Rewards: 2x points $6,000 x 2 points = 12,000 points |
| Total Miles / Points | 37,500 + 7,500 = 45,000 miles | 30,000 + 12,000 = 42,000 points |
| Travel Redemption Value: | 45,000 miles x 1 cent = $450 | 42,000 points x 1.25 cents = $525 |
| Annual Fee | $0 | $95 |
| Net Value | $450 – $0 = $450 | $525 – $95 = $430 |
| Extra Value – First Year | After spending $500 in 3 months, you get $200 in travel value with no fee, resulting in a net value of $200. | After spending $4,000 in 3 months, you get $750 in travel value minus the $95 fee, resulting in a net value of $655. |
| The Winner Is | Ideal for You? | Ideal for You? |
Comparing Summary
Scenario 1:
The Chase Sapphire Preferred Card offers higher rewards value despite the annual fee, making it more advantageous with net rewards of $460 compared to $367.50 with the Capital One VentureOne Rewards Credit Card.
Scenario 2: The comparison is closer, but the Capital One VentureOne Rewards Credit Card slightly edges out with a net value of $450 compared to $430 for the Chase Sapphire Preferred Card.
Given these scenarios, the Chase Sapphire Preferred Card is generally better for high travel spend and leveraging its point multiplier and higher redemption value. However, for lower travel spend or if you prefer a no annual fee card, the Capital One VentureOne Rewards Credit CardCapital is a solid choice.
Net Value Over Time: Long-term (After First Year):
To determine the best card for you, the long-term value based on spending habits and the initial bonuses are another consideration.
- Chase Sapphire Preferred Card: If you value ongoing travel and dining rewards and can offset the $95 annual fee with the benefits and rewards, this card could be more valuable for frequent travelers.
- Capital One VentureOne Rewards Credit Card: With no annual fee and a straightforward rewards structure, this card provides steady value without cost.
Conclusion:
- Best for High Initial Travel Value: Chase Sapphire Preferred Card if you can meet the spending requirement and value the higher travel redemption.
- Best for No Annual Fee and Easy Reward Earning: Capital One VentureOne Rewards Credit Card for those who prefer simplicity and no recurring fees.
Evaluate which card aligns with your travel and spending habits to maximize benefits.
Tips:
@1. Capital One Travel Accident Insurance: Get automatic insurance for a covered loss at no extra charge when you use your credit card to purchase your fare.
@2. Capital One Extended Warranty: You’ll get additional warranty protection at no charge on eligible items that are purchased with your credit card.
@3. Capital One Auto Rental Collision Damage Waiver: Rent an eligible vehicle with your credit card and you can be covered for damage due to collision or theft.
@4. Chase Travel Protection Benefits when book your travel using your Sapphire Preferred Card:
- Trip Cancellation/Interruption Insurance – Reimburses up to $10,000 per person and $20,000 per trip if a trip is canceled or cut short due to covered reasons like illness, severe weather, or death.
- Trip Delay Reimbursement – Provides reimbursement for expenses like meals and lodging if your trip is delayed for 12+ hours or requiring an overnight stay due to a covered reason, up to $500 per ticket.
- Baggage Delay Insurance – Reimburses for essential purchases like clothing and toiletries if your baggage is delayed over 6 hours, by passenger carrier up to $100 per day for 5 days.
- Lost Luggage Reimbursement – Provides reimbursement if your checked or carry-on bags are lost or damaged by the carrier, you’re covered up to $3,000 per passenger.
- Travel Accident Insurance – When you pay for your air, bus, train or cruise transportation with your card, you are eligible to receive accident death or dismemberment coverage up to $500,000.
- Auto Rental Collision Damage Waiver (CDW) – Decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is primary and provides reimbursement for theft and collection damage for most rental cars in the U.S and abroad.