American Express has an invitation-only credit card with a $7,500 initiation fee and a $2,500 annual fee. The Black Card, or Centurion Card, is a "status symbol," according to Travel + Leisure — but it is one many millennials are rejecting. Savvy millennials are looking for cards offering more bang for their buck.
This means assessing whether annual fees are worth it at all. There are great no-fee options, like Citi Double Cash, offering 2% cash back on purchases, or Capital One Quicksilver Cash Rewards, with 1.5% cash back.
Paying annual fees is smart if you earn enough rewards to exceed the fees, use perks the card provides or get free services you'd otherwise pay for. "If you need to purchase primary auto rental coverage each time you get a rental car, it might be wise to get a rewards card that offers that coverage as a cardholder perk instead," the Simple Dollar explained.
So before you dismiss fee cards out of hand, estimate how much you'd need to spend for the rewards to surpass the fee. Or, ask the creditor to waive the fee — surprisingly many consumers are successful when requesting a fee waiver.
2. How will you reward me for spending with your card?
No-frill cards without rewards points actually still exist, but why anyone would want one is a mystery. "Every time you use your credit card, the merchant pays a fee (called interchange), most of which goes to your bank," Forbes explained. "Your goal should be to get as much of that interchange back as possible." You should be rewarded somehow for using a card, whether that reward is cash, gifts cards, free flights or an all-expenses paid trip to Rock 'n' Roll Fantasy Camp.
When shopping for a card, find out how many points you earn for purchases, what each point is worth and what you can redeem your points for. Capital One VentureOne offers 1.25 miles per dollar spent, for example, while Chase Sapphire Reserve gives you three points per dollar spent, which equates to around a 6.3% return if you do the math.
Also, make sure to look for rewards you'll use, as almost a third of credit card holders don't redeem points. You could miss out on really cool stuff by not using your rewards. "For my husband's 40th birthday we took an around-the-world trip. We flew business class to Amsterdam, Singapore and the Maldives, where we stayed in a private villa. The trip would have cost tens of thousands of dollars. In total, our award tickets cost 240,000 United miles, plus around $200," Summer Hull told Travel + Leisure.