I'm Paying $395 for a Credit Card

Hey there Money Saver! Welcome back to another week of How to Save A Buck, where we explore ways of saving money in personal finance, credit cards, and investing!

You read that right.

I recently applied for and got approved for a credit card with a $395 annual fee.

And that charge hit my credit card immediately.

“Why on earth would you pay that much for a credit card?”, a friend asks.

Well, what if I told you the value I get from the card exceeds $395?

Still not sold? Read on…

Here at How To Save A Buck we love credit cards. They allow us to partake in tons of free travel, access to airport lounges, and primary rental car insurance - among others.

Don’t be shocked - we have 12 cards in our wallet. All serve a different purpose - some are no-annual-fee cards that we hold merely for the credit history. (Credit history is a crucial part of your credit score which we covered in a previous newsletter.) Others we hold for their travel perks.

So, if we have 12, why another one? Good question, so let’s break it down and see why paying $395 is actually a way to SAVE.

1. The card offers an annual $300 travel credit, good for any travel booked through the CapitalOne travel portal. That reduces your annual fee to $95.

2. The Venture X card currently offers 90,000 miles if you spend $4,000 in 3 months. According to One Mile At A Time, those 90,000 miles are worth about 1.7 cents each, which equates to over $1,500 in travel (if transferred to travel partners - 90,000 x .017 = $1530)

3. The card also gives 10,000 anniversary miles to cardholders. If redeemed through their portal, this 10,000 mile gift is automatically $100 in value. This is CapOne values their point only at 1 cent per point. So, your $95 effective fee just went to a CREDIT of $5! (Yes - CapitalOne is paying you $5 to keep the card)

4. A Global Entry credit of $100 every four years. Global Entry is a fantastic way to speed through customs upon your return to the US and guarantee you TSA Precheck on domestic US flights.

So a $395 fee becomes a credit of $5? YES. But of course, you need to utilize the card’s benefits and be diligent about using the card to the max. This means not redeeming your points for silly gift cards, but transferring them to their travel partners for business class seats on international travel!

The above points don’t mention other nice travel perks, such as free enrollment into Hertz’s President Circle (the highest loyalty tier of Hertz) or exclusive access to the CapitalOne Lounge network.

What’s this network? Well, CapitalOne is working on its own branded lounges in airports around the US. It may not sound exciting, and of course, they are only in a few airports at the time of this writing, but man, they look SLICK.

Locations are currently at Dallas DFW and Dulles IAD, with another slated for Denver DEN. While I don’t travel through these airports frequently, it’ll be a nice quiet reprieve from the doldrums of the airport environment. And don’t forget…you’ll save $ from not buying that $13 ham sandwich at the airport kiosk.

The Venture X is going to save us money. I mean, a credit issuer paying us $5 to keep the card, tons of free travel perks, and other benefits? What’s not to like?

Well, all this rosy talk is meaningless if you don’t pay your card in full each month. Paying any sort of interest at credit card levels (~25%) completely negates the benefits of such cards.

As soon as you get hit with interest, these benefits don’t mean jack.

And Jack doesn’t know how to save.

Save On,

Chris

Check out the CapitlaOne Venture X here.