What are annual travel credits and how do they work?

An annual travel credit is a perk available on select travel credit cards that comes in the form of statement credit for certain travel purchases. Annual travel credits usually range between $100 and $300 and cover a wide range of expenses, including airline seat upgrades and taxes and fees from award redemptions.

Premium credit cards are most likely to offer an annual travel credit as part of the perks offered with card membership. What each credit covers depends on the card’s specific terms.

How annual travel credits work

To see how annual travel credits work in action, take a look at the following real-world examples of top travel credit cards with annual travel credits.

American Express® Gold Card

The Amex Gold comes with a nominal annual fee compared to others on this list. With an annual fee of just $250, the card’s annual $100 airline incidental credit could be quite useful to the right traveler.

Before you can use the airline incidental credit that comes with holding this card, you’ll have to choose an airline. This choice must be made each year. From there, your credit will automatically be applied to eligible airline purchases such as checked baggage and seat assignment fees as you incur them.

Capital One Venture X Rewards Credit Card

The Capital One Venture X comes with a $300 annual travel credit that can be used for travel booked through the Capital One Travel Portal. You can use cash or miles to book rental cars, hotels, and airline tickets through the Capital One Travel Portal.

The great thing about this card’s $300 annual travel credit is that you can use it all at once or use only as much as you need. This means that you can break up how much of the credit you use at any given time. This credit renews each year on your card’s anniversary, and with a $395 annual fee, the $300 annual travel credit alone nearly eliminates the annual fee (as long as you’re able to fully utilize the credit each year).

Chase Sapphire Reserve®

The Chase Sapphire Reserve offers one of the most flexible annual travel credits available today. The card’s $300 annual travel credit can be used toward any travel purchases — not just those made through the Chase Travel Portal.

Whether you make your travel purchase through the portal or not, the credit will automatically be applied to eligible travel purchases until you’ve used up your entire $300. The Chase Sapphire Reserve comes with a $550 annual fee, meaning that its annual travel credit can substantially offset your annual fee if you’re able to use it in full.

The Ritz-Carlton® Rewards Credit Card*

The Ritz-Carlton card is no longer open to new applicants, but you can still product change to it if you hold another Chase co-branded Marriott Bonvoy credit card.

For those lucky enough to already hold the card, you’ll likely find the $300 annual travel credit to be useful, as you can use it toward any travel purchase you make with the card, including with airlines, hotels and car rental agencies. However, you’ll have to call Chase or message the company online to request that the credit be applied to your qualifying purchase. You should also be aware that this luxury credit card comes with a $450 annual fee.

The Platinum Card® from American Express

The Amex Platinum has the highest annual fee of the cards on this list, coming in at a whopping $695. Fortunately, the card also comes with not one, but two annual travel credits, among a bevy of other benefits.

First, the card comes with a $200 incidental airline fee credit that can be applied to seat selections, checked baggage fees and more with a pre-selected airline. As with Amex Gold, you must pre-select your airline at the start of the year, and the credit will only cover eligible purchases made with that airline.

The second annual travel credit that comes with the Amex Platinum is up to $200 annual hotel credit. This credit, which comes in the form of a statement credit, will be applied to eligible prepaid bookings of two nights or more with Amex Fine Hotels + Resorts or The Hotel Collection.

Do annual credits make premium travel credit cards worth it?

Whether an annual travel credit makes a premium travel credit card worth it has everything to do with the value of the card’s perks, relative to your specific situation.

The Amex Platinum is a great example of this. While the card comes with a $695 annual fee, it also comes with a ton of other benefits beyond the two credits mentioned above. For instance, the card also includes up to a $240 annual digital entertainment credit, up to a $300 annual Equinox credit, up to $100 annual Saks Fifth Avenue credit and $200 annually in Uber Cash (Terms Apply).

In total, the card offers over $1,000 in annual credits, but unless you can fully utilize most of those credits, you may not be able to recoup the cost of the card’s annual fee. For example, if you don’t use Equinox, never shop at Saks Fifth Avenue, don’t have a need for Uber Cash and don’t stay in hotels included in the Amex Fine Hotels + Resorts group or The Hotel Collection, you may not get enough value from the card to justify its cost.

The Venture X card on the other hand only has a $395 annual fee, but comes with a $300 annual travel credit. The card also gives cardholders 10,000 Capital One miles each year on their card’s anniversary, which is worth an additional $100 in value when redeemed through the Capital One Travel Portal, according to Bankrate valuations.

This puts your overall value higher than the annual fee for this card — but again, that’s only true if you travel enough to earn the full $300 annual travel portal credit and redeem your bonus miles.

The bottom line

Credit card annual travel credits can be a valuable perk if you hold the right travel credit card for your lifestyle. Before you open a new card, however, be aware of any restrictions around redeeming them, as well as the card’s annual fee. Taking the time to compare the credit card’s value against your travel habits will help you to determine if it’s the right card for you.

The information about the The Ritz-Carlton® Rewards Credit Card has been collected independently by Bankrate. The card details have not been reviewed or approved by the issuer.