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AmEx adds new travel rewards card

By Leslie McFadden · Bankrate.com
Tuesday, November 2, 2010
Posted: 3 pm ET

American Express launched a travel rewards credit card this week called the Blue Sky Preferred Credit Card, a card aimed at frequent travelers that don't mind paying an annual fee. The card offers double points on hotel, car rentals and dining purchases, and one point on all other eligible purchases. Points are redeemable for travel, cash back or gift cards starting at 7,500 points. Most interestingly, cardholders get an annual $100 allowance for airline incidentals.

That is, cardholders can get reimbursed for flight-related expenses, such as checked-baggage fees, in-flight meals and movie purchases, by using the card for the ticket and fee, and requesting the rebate within 60 days of the bill.

The card comes with other perks from American Express, such as purchase protection and extended warranty coverage.

Analyzing annual fee cards

The allowance alone can offset the annual fee, at $75, but only if you travel frequently and typically pay fees when you fly. In general, paying an annual fee for premium rewards doesn't make sense if you don't charge much during the year.

Consumers that spend less than $5,000 annually are considered "low volume users," according to a calculator at Bankrate.com that helps you find the best credit card for your lifestyle. Low-volume users should generally stick with fee-free cards.

As I've stated in previous posts, there is no best credit card for everyone. If you sometimes carry a balance, a low interest rate should be the primary concern. If you are paying a high interest rate on a balance, consider a card that offers a low interest rate on balance transfers, a nominal balance transfer fee and a lengthy introductory period on that transferred debt. If you're new to credit, look for a card that reports to the major credit-reporting agencies and if applicable, charges an annual fee under $50.

Weigh in: Do you possess or would you ever consider getting a fee-based rewards card? Share your thoughts in the comments section.

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1 Comment
Debra James
November 03, 2010 at 6:46 pm

I got an American Airlines Citibank American Express card, because I was offered 75,000 if I charged $1500 within 6 months. No problem, the miles were credited to my frequent-flyer account right after the first bill statement. This card charges an $85 annual fee after the first year of opening the account (they also offer a card that charges $50 per year, but you can earn only 60,000 vs. 100,000 with the higher fee card). One of the primary benefits for me is that it provides travel insurance for every trip that I purchase with the card. So, after just one international trip I have recouped the annual fee by not having to pay for travel insurance.

I also enjoy earning miles for every purchase, and can earn bonus miles if I shop online through AA's shopping portal. Although AA also offers a Visa Citicard, I chose the AE card because I frequently shop at Costco (they only accept AE in the warehouse), and that is a place where I usually make big purchases. I also have the Costco AE card, and the biggest difference is the Costco card is fee-free with an active Costco membership, and provides a cash-back reward that can only be redeemed once a year vs. the miles for the travel reward card that are posted to your FF account in 1-2 months. The Costco card sends the rewards check in your February statement; a perfect way to lose track of it. It would be much more convenient if they provided the option to have the rewards amount credited to the card balance. But I guess they are relying upon some people not cashing their rewards checks before they expire, and thus saving the company money. On a side note, in my opinion the Discover More or the AE Cash Blue cards are the best cash reward cards. I will probably convert my Costco AE card to the AE Cash Blue card after next February.

I definitely would recommend that a person search online for the best promotion offered for opening a travel rewards card. The promotional miles I received allowed me to book trips to the Caribbean and Europe (off-peak travel times). I just wish the card allowed one free checked bag like the Delta Airlines reward card. The $100 travel expense perk is nice, but I'd rather have the free checked bag, because that fee goes up at least once per year.

As Leslie has stated, any kind of rewards card is truly only beneficial to those people who do not carry a monthly balance and charge enough so that their rewards outweigh the annual fee. Typically, each mile is valued at one cent. So, if the annual fee is $50, a person will need to use the card to pay for $5000 in purchases to break even on the annual fee.