Are Credit Card Perks & Benefits Worth The Fees?
While many of us avoid credit cards with annual fees, some credit cards carry perks and benefits worth far more than their annual fee. In fact, some Canadian cards can offer people $1,000’s in hidden benefits. Many people wonder whether the annual fee on a premium credit card is worth it, but it all depends on how you use the perks.
Beyond juicy rewards and tantalizing 0% introductory rates, for a mere $120 annual fee, you could get a companion ticket to Hawaii every year, travel medical insurance, and free roadside assistance.
To help us evaluate just how much value one can get with an annual fee card, we’ve assigned a market value to some of the more common benefits available on Canadian credit cards with annual fees. If you want to squeeze even more juice from the banks, you can get some of these benefits FREE, if you sign-up for a new premium card with an annual fee waiver bonus in the first year.
In This Article:
1. Annual All Inclusive Trip Cancellation/Trip
Interuption/Travel Medical Insurance: $811 / year. We sampled a quote from Blue Cross for annual travel insurance coverage (unlimited trips), for a family of four, that included travel medical coverage (17 days consecutive), trip cancellation and trip interruption. This type of coverage is ideal for families that go to the United States more than once per year (maybe fly once, a few weekends over the border, etc…).
The great news is that many Canadian credit card travel insurance policies offer the same coverages, with very similar terms – for FREE. You can now start thinking about your credit card as a miniature travel insurance broker with pre-bought policies. Don’t by any incremental insurances until you’ve checked out what your card already covers you for. You can then top-up, if and where needed.
Did you know that even if you travelled to the United States by car with your family, in most cases, all of you would be protected by the travel medical coverage that comes included with your credit card?
2. Car Rental Insurance
$33.99 / Day. We checked Hertz.ca and they were charging $33.99 a day for loss damage waiver insurance, a coverage the vast majority of annual fee credit cards, and even some no-fee Canadian credit cards, offer for free.
Recommended Read: Best Credit Cards for Car Rental Insurance.
3. Extended Warranty Coverage
$579.99! As Consumer Reports has often argued, extended warranty plans offered by retailers are a raw deal for the consumer. The good news is, many credit cards already offer extended warranty coverage absolutely FREE.
To see how valuable that coverage is, we went to the Brick and ordered a Sony 65″ LED TV for $3,025. The Brick offered Warranty Coverage of 3 years from the date of purchase for a whopping $579! But when you look into the details you realize that you’re assigning your manufacturers warranty to The Brick, and they extend the coverage to 3 years from the manufacturers 12 months (so you’re getting an extra 2 years coverage). Alternatively, most cards will extend the manufacturer’s warranty by 1-2 years for free!
So next time you buy a washer/dryer, computer, camera, sofa, TV or phone, just remember your credit card likely doubles your manufacturer’s warranty by up to 1-2 years for free. Don’t fall for one of retail’s biggest gaffs and worst values.
4. Annual Companion Ticket
$707, plus taxes. Some cards, like the Alaska Airlines Platinum Plus® Mastercard® credit card and the WetJet RBC World Elite MasterCard, offer an annual companion ticket, for $99 to $121. The great news is, you can use that companion ticket to bring a friend along to any destination in continental North America, and in the case of Alaska Airlines even to Hawaii and Alaska – for $121!
So while we priced a ticket on Expedia from Vancouver to Honolulu at $707.76, you can actually bring a companion with you for $121, for a savings of $586.76! Well worth the $75 annual fee on the Alaska Airlines Platinum Plus® Mastercard® credit card or the $199 annual fee on the WestJet RBC World Elite MasterCard.
Standard Annual Interest Rates for the Alaska Airlines Platinum Plus® Mastercard® credit card are 19.99% on purchases, 22.99% on balance transfers✪ and access cheques, and 22.99% on cash advances.
5. Free Checked-Bag
$25 per direction. Whether you’re flying Air Canada or WestJet, there’s no escaping checked baggage fees. It seems that airlines are catching us at every corner. Soon we’ll have to pay just to have the right to extend our legs… oh wait. Anyways, several Canadian travel credit cards offer free checked baggage to the primary cardholder, just remember it may be available on reward flights only (flights in which you redeemed points, as opposed to paid cash), but for each return trip you could be saving upwards of $50 – nothing to sneeze at.
6. Free Lounge Passes
$108. Some travel cards offer up to 4 free airport lounge guest passes. With long layovers and delays, getting access to free snacks, beverages, showers and luxury space comes in handy. If travelling in luxury and comfort is a priority, lounge access may come as a valued benefit. In some cases you can even bring your travelling companion along with you into the lounge at no additional cost – a real bargain.
7. Mobile Insurance
$1,000! Whether we like to admit it or not, most of us could not live without our cell phones. Not only is it one of our most treasured accessories (with people spending upwards of $1200 or more for the latest smartphones), it’s an invaluable aid that helps us communicate, socialize, organize our lives, keeps us informed and entertained, and more. Mobile phone insurance covers you up to a set amount (the amount depends on the credit card provider) annually in the event your phone is lost or damaged.
Clearly, mobile phone insurance is a huge benefit but it’s offered by surprisingly few premium credit cards in Canada. One credit card offering this precious perk is the BMO eclipse Visa Infinite* Card, Canada’s newest credit card. The card features mobile phone insurance that gives you up to $1,000 each year of protection against loss, theft, or accidental damage to your cell phone anywhere in the world. It’s a nice warm and fuzzy feeling when you know your smartphone is protected no matter if you’re at home or traveling around the world.
8. Roadside Assistance
We price checked against CAA, which charges $88 for its lowest level Classic Membership. Several Canadian credit cards now offer free roadside assistance as an included benefit. While many cars now come with free roadside assistance for the first 12-24 months, after that, you’re on your own. This value alone can be worth the annual fee of many credit cards.
So the next time you cringe at the thought of an annual fee, ask yourself what your needs are first. You may be surprised at what your credit card offers you. For a mere $120, you could get well over $1,000 of value EVERY year! Just don’t fall in love with a bunch of perks you may never use, because paying for things you don’t need, is never a good deed!