Why I’m Paying the Annual Fee for a Card I Don’t Use

I’ve decided that I’m going to go ahead and shell out the $95 this year to pay for the annual fee for my Citi Premier credit card. It’s a bit of an odd decision considering that I never use that card for anything, but after taking a look at the big picture, you’ll see why it makes sense for me to pay for an annual fee for a card that I don’t use. 

First, a quick refresher on some of the perks of the Citi Premier. 

Citi Premier.

Citi Thankyou transfer partners 

The Citi Premier earns Citi Thankyou Points that can transfer for the following transfer partners: 

Airlines

  • Asia Miles (Cathay Pacific)
  • EVA Air
  • Eithad Guest
  • Flying Blue (Air France, KLM)
  • Garuda Indonesia Frequent Flyer
  • Malaysia Airlines Enrich
  • Qantas Frequent Flyer
  • Qatar Airways Privilege Club
  • Singapore Airlines KrisFlyer
  • Thai Airways Royal Orchid Plus
  • Virgin America Elevate (Get 500 Elevate points for 1,000 pts)
  • Virgin Atlantic Flying Club

Hotels

    • Hilton HHonors (Get 1,500 HHonors Bonus Points for 1,000 pts)

Bonus earning potential 

  • 3X on travel including gas
  • 2X on dining and entertainment 

The Citi Premier offers some of the best bonus earning potential with 3X on a broad travel category that also includes gas (unlike other cards like the Chase Sapphire Preferred/Reserve). With the additional 2X on dining and entertainment, I think the Citi Premier ranks among some of the top earning rewards credit cards.

Why I don’t need the Citi Premier 

I put the majority of my expenses on Chase cards like the Freedom Unlimited, Freedom Classic, Ink, and Sapphire Reserve (the “Chase Quadfecta”). Those four cards earn me a tremendous amount of Ultimate Rewards. And when I’m not putting expenses on those cards, I’m putting them on my Premier Rewards Gold Card, Platinum Card, or Amex EveryDay, which allow me maximize my earnings for groceries and airlines. 

With my spending divided between Chase Ultimate Rewards and American Express Membership Rewards, I simply don’t have enough spend left over to put on the Citi Premier. If I were planning a redemption on a partner like Singapore or Flying Blue (which are also partners of Chase and Amex), then I’d put things like gas and entertainment on the Premier but that’s not the case. So rather than leave a few thousands points stranded in my Citi Thankyou account, I’d rather have points I can actually use in Chase or Amex (even if that means only earning 1.5X on entertainment). 

So since I have no need for this card, why am I still paying the annual fee? 

The reason is the Citi application rule which states that you can’t receive a sign-up bonus if you’ve had another Thankyou card opened or closed within the past 24 months. This means that if I cancel or even downgrade or product change my Citi Premier to avoid the annual fee, I’ll reset the clock and have to wait two years before I can receive another sign-up bonus from a Thankyou Point earning card like the Citi Prestige. This is a bummer because Citi allows you to product change cards very easily, allowing you plenty of options to avoid the annual fee. 

citi-prestige-card
Citi Prestige

So in light of that, I’ve decided to pay the $95 annual fee so that I can pick up a sign-up bonus from the Citi Prestige in 12 months. The sign-up bonus for the Prestige has fluctuated but I feel pretty good about my chances of getting the 50,000 bonus, or I might even get lucky and that bonus will jump up even higher in another year. The Prestige also has decent bonus earning potential with 3X on hotels and airfare and 2X on dining and entertainment and a number of benefits that can make it a worthwhile card, in my opinion

Some of these benefits include: 

  • $250 airline credit (essentially reducing the annual fee to $200)
  • Priority Pass Select airport lounge access for you and up to two guests for free
  • Complimentary night at any hotel of your choice after a minimum 4-consecutive-night booking 
  • $100 Global Entry credit
  • 3 free rounds of golf (set to expire July 23, 2017)
  • Rental car benefits with National Car Rental, Avis, Budget, and Sixt.
  • Add authorized users for $50 each.
  • Concierge service
  • Mastercard luxury hotel and resorts

When I get the Prestige, I’ll have to pay the $450 annual fee but I’ll be able to take advantage of two $250 airline credits before my 2nd annual fee hits, so in effect, I’ll be paying $50 + the $95 annual fee of the Premier in order to earn 50,000 Citi Thankyou Points. People estimate the value of Thankyou points differently, but to me, I consider 50,000 points to be worth at least $625 of travel. And since I’ll probably put them to use for business class or first class seats, I’ll receive something much higher in value. 

Getting the Prestige is also especially worth it to me because I think I’ll be able to take advantage of the 4th night free benefit at least once and maybe even 2 or 3 times in 2018. That perk alone could save me a couple of hundred dollars and outweigh the cost of the annual fees I’m paying. Thus, when I factor in this perk, it really makes me want to jump on the Prestige. 

So eventually, I’ll likely have the Reserve, Platinum Card, and Prestige all at once which based on my spending and lounge usage, will make economic sense

Final word

I try to avoid annual fees whenever possible and generally I am able to avoid paying most annual fees. The exception is when I’m netting a sufficient return in my “investment” of paying the annual fee. In this case, I’ll be able to come out well on top it’s just going to take a little bit of patience. And who knows, I might get lucky and catch an even better sign-up bonus 12 months from now. 

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