Credit Cards Transforming into Coupon Books: A Historical Shift and Its Rationale
Travel credit cards are no longer the straightforward rewards-earning tools they once were. With ever-growing complexity and branded benefits, they resemble coupon books more than traditional credit cards.
A few years ago, I could've defined a good travel rewards card as one that offered easy-to-use benefits and simple ways to offset annual fees. Cards like The Platinum Card® from American Express and the Chase Sapphire Reserve® were perfect examples, providing valuable travel credits, airport perks, and a manageable $550 annual fee.
Today, fewer cards fit that definition due to an unfortunate trend in the industry. In 2021, American Express increased the Platinum Card's annual fee to $695 and added over $1,300 in statement credit benefits, such as prepaid hotel bookings, CLEAR membership, digital entertainment credits, and more. These benefits make tracking spending a daunting task that risks leaving hundreds of dollars on the table.
Worse, these benefits are branded, meaning cardholders are incentivized to adjust their spending to meet specific criteria. If you aren't regularly shopping at Walmart or subscribed to the approved digital entertainment services, you might miss out on hundreds in possible credits.
The issuer American Express isn't alone in this trend, as Chase followed suit with the Sapphire Reserve. The annual fee rose from $550 to $795, and the card now comes with credits for dining, food delivery, and airfaire. The list of benefits requires serious spending, mental math, and regular usage of partner services, branding your life based on the card's criteria.
The good news is that some cards still offer the perk of flexibility, such as the Capital One Venture X Rewards Credit Card. Its rewards include an annual $300 travel credit, 10,000 bonus miles each anniversary, Global Entry or TSA PreCheck credit, Priority Pass Select membership, and more. At a $395 annual fee, it's less than half the cost of some premium cards and provides a simpler, more flexible rewards structure.
Regardless of your travel credit card, keep an eye on its benefits. As the industry evolves, so too will the value proposition of your card and the hassle involved in maximizing its potential rewards. Ensure you're getting the value you desire, whether it's savings or luxury experiences, while avoiding credit cards that dictate your spending patterns.
Modern finance, with its emphasis on travel rewards, often impacts lifestyle choices. Instead of simplifying expenses, some travel credit cards now require careful tracking to maximize benefits, such as the American Express Platinum Card's prepaid hotel bookings, CLEAR membership, digital entertainment credits, and more. This trend may lead to a lifestyle that aligns with the card's criteria, rather than offering a straightforward rewards system.
