Earlier today, I got a question about the JetBlue credit card. The card is one of my favorites and has some unique benefits. Of course, if you never fly JetBlue, you’re probably not going to be interested.
The question I got was about whether the writer should get the card, but there’s a second question to be asked here. JetBlue offers two cards, one with an annual fee and one without. Which one is worth it?
Should I Pay An Annual Fee (Not Just for JetBlue)?
Fortunately, it’s one of the easier questions to answer. Unfortunately, the answer is “it depends.” Fortunately, it’s usually pretty easy to determine whether that “it depends” is really a yes or no.
If you have a choice of two cards with the exact same benefits, the answer is obvious. Why pay an annual fee when you don’t have to? Surprisingly, that situation does pop up from time to time, usually for the first year that you have a card. Frequently, a credit card will offer to waive the first year’s annual fee if you apply at a certain site or use a particular code. Keep an eye out for those.
Usually, though, a card with an annual fee comes with better benefits than the one with no fee. The question that you have to answer is whether you are going to use those benefits. If you can make more money by paying the fee up-front and taking advantage of everything that the card offers, you might be better off.
JetBlue As A Test Case
It’s easy to run a comparison between the cards in the case of JetBlue, since they match them up side-by-side. So line them right up. The card with the fee costs you $99 per year but in this case, it’s pretty easy to determine that the card with the fee is the right choice for most. Consider…
- The no-fee card gives you a sign-up bonus of 10,000 points, but the $99 card gives you 40,000 (both after hitting a minimum spending level). A TrueBlue point is worth about 1.5 cents, so right off the bat, you’re up about $350 (the value of the 30,000 points, minus the $99 fee). That is, of course, only a one-time benefit, but it covers more than three years of the fee.
- The card with the fee gives you 5,000 points on every anniversary. That’s worth $75 right there, so the card is only costing you $24 ($99 minus $75). The free card comes with nothing.
- Those two are the easiest to come up with a cash value for, but the annual fee card comes with a bunch of other benefits, as well, including more points per dollar spent on JetBlue flights, the opportunity to earn Mosaic status based on your spending and a refund of 10% of the points that you use.
Why Do Airlines Have Multiple Cards?
So what’s the reasoning behind having multiple cards, some with fees and some without? It could be any one of a number of reasons. Many times, the annual fee cards require a higher credit score than the no-fee cards. They are also a way of segmenting customers. And finally, paying the annual fee is one more way to tie you to the airline. Once you have paid for something, you’ll feel like you need to use it more to justify it.
But the bottom line is this: Whenever you have a choice, don’t just go right for the freebie. The card with the fee may end up making you more than the cost of the fee itself.
Want to subscribe? Just enter your email in the box above (and to the right) and click on the confirmation. GMailers, check your Social or Promotions boxes!
Follow me on Twitter @FFMiles101 or share with the Facebook button below.
And finally, you can apply for credit cards through the Credit Cards for Charity link above. All card proceeds are donated to charity, so please do well by doing good!