Credit cards are a massive personal interest of mine, and this time last year I took a massive plunge into the hobby by picking up the (in)famous American Express Platinum. The card is fabled to come with legendary perks with a legendary fee ($695 a year just to have the card). I've had the card for a year now, and the looming renewal of the membership fee begs the question:
Before I get into the benefits, it's pertinent to evaluate the true cost of the card. Not only is there the obvious annual fee, but the opportunity cost of using this card compared to a different card must be considered to. Almost all credit cards will give at least 1% cash back on all transactions, however there are now a myriad of options that give 2% back (the Citi Doublecash being the most well-known among them). So it's important to bear in mind how much money I would've gotten had I used a simpler, no annual fee credit card. Discussions of finances, especially using exact numbers can make people uncomfortable, however I believe that it's best in situations such as these to be as precise as possible. In my year of holding the Platinum card I put exactly $22,534.23 of spend on it, had all that gone on a 2% back card I could've reaped $22534.23 * 0.02 ≈ $450.68, meaning the true cost of the Platinum for me was $1145.68. So what exactly did I get for over a grand?
The Platinum card comes with quite a few perks, which American Express advertises as being worth over $1500. However not all these credits should be taken at face value. For example, the card offers a $300/year credit for Equinox and SoulCycle. If you don't use either of these products the credit is not worth $300 to you... it's worth $0. A credit is only worth its face value if it's covering something that you would've actually paid for anyway. I'm going to go through each of the credits the card offers and describe how much value I actually got out of them:
When I first got this card, this was seen as a joke credit, effectively worth $0, as it could only be applied towards Audible, Peacock, SiriusXM, and The New York Times... I didn't expect much out of this credit. I chose to initially use it for Peacock to enable us to watch the Olympics, which is something I would've actually paid for, so we got $10.38 of value for that month. However afterwards I would've been sure to cancel Peacock if it weren't free. Yes, I did enjoy the opportunity to watch The Office and Parks and Recreation again, but I don't think I would've paid for that, so the remaining months had to be valued at $0.
However that all changed in April, when American Express added Disney+, ESPN+, and Hulu as options to this credit. I already subscribed to Hulu and paid for the STARS addon (yes, Hulu addons counts towards the credit, meaning you could also use it for HBO Max using the Hulu bundle!). So far, I've only gotten that value for April, May, and June, however for this card's second year this perk will easily be worth the full $20/month, or $240/year.
My Value: $70.38
American Express operates both the "Fine Hotels + Resorts" and "The Hotel Collection" programs, and to redeem this credit you must book through one of those programs. That's one annoying hoop to jump through, another hoop is that The Hotel Collection requires you stay at least two nights in order to qualify for the credit. Based on those names, one might assume that only very fancy, upscale hotels are included, however I've found quite a few upper-midscale hotels in the programs. If you view the hotel as nothing more than a place to rest on a vacation, and keep them as cheap as possible you'll likely value this credit at $0. Personally, I used this credit to book a nice hotel for myself and my Significant Other for what turned out to be a wonderful trip to Seattle, and we both would happily pay a little extra to stay at a nicer hotel at least once a year, so I can safely value this credit at the full $200. Some people have reported that booking through American Express's travel portal results in a price surcharge, however in my personal investigations I haven't found that to be the case, the prices on the travel portal have either been identical to the prices through the hotel itself, or off by only a couple cents. I'd say it's probably worth quickly double-checking to make sure but this hasn't been a problem for me.
On the aforementioned stay, we used the Hotel Collection, which also included a $100 "experience credit". One of the services the hotel offered was a town car that could take us back to the airport. Using this service saved us about $40 that the taxi ride would've cost, so I'm included that in my value of this credit as well.
My Value: $240
To use this credit, you must first select a qualifying airline on American Express's website. All the main airlines are available as choices. Without doing the proper research and investigation into how to optimize this credit I simply selected Southwest Airlines because I wanted to experiment with them. The intention of this credit is that it will only apply to incidentals, such as bag fees, in-flight food and drink, etc. Basically everything except the actual ticket. There are many ways to 'game the system' to get this credit to apply for the price of a ticket. I wasn't comfortable doing that though since American Express is known to shutdown people for 'cheating', however I have yet to hear of them going after anyone in the case of 'creatively' applying the airline credit.
In any case, I got $67.96 for this credit last year. I honestly have no idea where that number came from, as we didn't purchase any incidentals on the one Southwest flight we took that year. This amount was inexplicably chosen to be refunded from our ticket price. In the years forward I expect to get much more value out of this perk. My strategy will be to buy cheap tickets from Frontier and using the incidental credit to buy legroom upgrades. I happen to be very tall, so legroom upgrades are something I would happily pay for, so getting them for 'free' will be a nice perk.
My Value: $67.96
Free Walmart+ is a nice perk to have, having groceries delivered to my house for "free" (there's an expectation to tip the delivery driver) is a welcome perk when we need groceries but don't feel up for going to the store. All that being said, I don't think I'd ever actually pay for this service.
My Value: $0
This perk is broken into $15/month, plus a bonus $20 (so $35 total) for December. The perk gives you temporary Uber cash straight into your account, so you don't even have to pay with the Platinum card in order to benefit. If you live in the Suburbs like me, this perk might be easy to write off, however the Uber cash can also be used for Uber eats! Now I don't particularly care for food delivery services, as I've found they typically take a very long time to arrive, the food is cold when it finally gets to you, and it doubles or even triples the price! But Uber Eats allows its users to pickup food at the restaurant, so what I'll typically do is once a month order something from Panera bread, let the prepare the food while I drive over, and just pick it up. I've found it works very, very well. I have checked the prices of food on Uber eats and compared them to the actual menu price at the restaurant and found them to be either the same, or close enough.
I had no trouble remembering to use this credit once a month except... last December. Unfortunately I forgot about it in its most valuable month! So I have to take $35 off the value :(
My Value: $165
Might be nice for some, but I live nowhere near an Equinox and have no interest in a SoulCycle.
My Value: $0
This is split into two $50 credits a year, awarded in January and July. I used my first $50 to buy this candle for my significant other, however we were both extremely disappointed. Neither of us thought it smelled very good and it didn't burn well. We both would take a $5-$10 candle from Walmart over this any day.
I used my second credit on this Braun coffee maker and I'm happy to report I'm much more pleased with that purchase. I use it every day and it's been great. I needed a solid coffee maker anyway and its price was in-line with other options I was considering, so I believe I got the full $50 of value out of the credit that time.
My Value: $50
I'm wary of giving my biometric information to CLEAR and completing the TSA precheck application process requires an interview I haven't had the chance to set up yet.
My Value: $0
The Platinum card offers free Cell Phone insurance, so long as you pay your phone bill with the card itself. The insurance does explicitly protect drop damage, which is nice. I did actually end up dropping my phone last month which resulted in a crack. There were quite a few hoops to jump through with the claim process unfortunately (a phone call, printing off and filling out 3 forms, I had to gather my billing statement from my phone carrier to proved I paid with the Platinum card, and of course I had to track down the receipt from the repair shop). That being said, assuming the insurance pays out (they said the process takes about 4 weeks), this perk should have saved me $128.02 (Repair bill was $178.02, and the insurance has a $50 deductible). However, I'm going to penalize the value with a $30 inconvenience fee since I had to spend about half an hour to submit the claim.
My Value $98.02 (assuming the insurance pays out)
Amex Offers are a couple book offered exclusively to American Express customers, and Platinum card holders can sometimes get pretty sweet coupons. Here's a quick rundown of the offers I was able to redeem on products I was already buying/was planning on buying anyway:
The Dell offer is an exception. The deal was I had to spend at least $600 to get the $120 back. There were some tech gizmos that I needed, however the need for the wasn't pressing, and there's no way I would've spend $600 at Dell had it not been for the credit. Therefore, I'll only value this credit at half of its face value.
My Value: $150
The Platinum card comes with quite a few other perks that are tricky, if not impossible to attach a dollar value to, such as free hotel status, extended warranty, trip delay insurance, free car rental insurance, etc. The biggest of these perks however is access to the Centurion Lounge and Priority pass lounges at airports. I've found these lounges to be total game changers at airports. They offer comfy seating, free food, free coffee, free alcohol, etc. Lounges have made my flying experiences in the past year dramatically more enjoyable. I don't know if I would actually pay to get into a lounge (though I would certainly be tempted now that I now how good they can be). For the purposes of this evaluation, I'm going to value these perks at $0. I see tremendous value in them, however I think when evaluating whether to keep a card such as the Platinum it's best to look at the worst realistic case scenario, and if there's a year without travel, all these perks value actually does drop to $0.
My Value: $0
So I was able to beat the $695 annual fee, however the value of the perks came short of beating out the annual fee plus the opportunity cost: $1145.68. However there's a big piece of the puzzle we haven't accounted for yet...
The value of American Express Membership Rewards (MR) points depends on how they're redeemed. The floor is 1.1 cents per point if you have the Charles Schwab Platinum (which I do), but they can be redeemed for a lot more (The Points Guy values them at 2 cents per point). In the interest of considering the worst realistic case scenario I'll evaluate at that floor value. Over the year I had the card its earned me 164,211 points, with a value of 164211 * 0.011 ≈ $1806.32! Added that to our total card value gets us $2647.68, subtract that $695 annual fee and the $450.68 opportunity cost, and the net value of the Platinum Card is $1502!!!
So obviously, the card more than paid for itself in its first year (which is pretty much a given with all 'luxury' credit cards, given their lucrative sign-up bonuses). In evaluating whether to keep the card or not, the second year's value must be considered, so let's take my value from the first year and subtract the sign-up bonus (100,000 points worth $1100) and I'm not going to assume that I'll be dropping my cell phone every year, so let's remove the $98.02. On the positive side, I expect to get the full $240 of the entertainment credit next year, as it's a reimbursement for a recurring monthly transaction that I don't have to remember to use $240 - $70.38 = $169.62 leaves us with an expected net value in the second year of $473.60.
That value should be even higher though, now that I'm more knowledgable about how to properly use the airline fee credit, however I'm going to leave this already very long post here. It's clear to me that given my current lifestyle the Platinum is a workhorse card for me that I can expect to return great value to me year over year, so I will absolutely be keeping it!
Nothing you read on aeryck.com should be construed as financial advice; you are responsible for doing your own research before making any financial decisions. This post is nothing more than one guy on the Internet's personal experiences.
Posted: 2022-07-01
