Changes for the PRG: Do new benefits justify a higher annual fee?

The bad news: The Premier Rewards Gold card from American Express (a CreditCardForum advertising partner) is upping its annual fee from $175 to $195.

The good news: It’s introducing some new benefits.

We took a close look at the changes the card will undergo (on June 1, 2015) – and we’ll try to help you decide whether the card is worth getting or keeping, or whether you’d be better served by another product.

What’s changing?

When cards make changes, it often seems like they’re taking things away. In fact the Premier Rewards Gold card did that itself at the end of 2014 when it took away the annual 15,000-point bonus it gave for $30,000 in spending in a calendar year.

But, while the raised annual fee isn’t ideal, the PRG is giving cardholders some new perks in return:

  • $100 airline fee credit: As with the American Express Platinum, you can now select an airline each year and use the credit to cancel out incidental fees, such as baggage charges and on-board food purchases.
  • 2X Membership Reward points at U.S. restaurants: That’s in addition to the existing reward structure of 3X points on airfares purchased directly from the airlines and 2X points at U.S. gas stations and U.S. supermarkets.
  • No more foreign transaction fees: For a card that has so many travel benefits, the 2.7 percent foreign transaction fee was a nuisance. Luckily, it’s going away.

Is the fee worth it?

An increase of $20 for a $100 fee credit, extra dining rewards and no more foreign transaction fees may sound like a fair trade. But it’s important to look at the issue holistically: Are the combined benefits worth $195? Let’s look at each in turn:

  • $100 airline fee credit: This is half of the amount you get with the American Express Platinum card (which gives you $200 credit each year) for less than half the annual fee. But there’s a chance you might not use the whole $100. Each year, you have to pick an airline – and you can use the credit only on that airline. If you don’t fly that airline as much as expected (or have status with the airline that gives you free bags anyway), you might not use up the entire $100. That said, if you do use it, it effectively brings down the annual fee to $95.
  • 2X points at U.S. restaurants: With this new addition, it seems like this card is an amalgamation of many other cards’ bonus categories – fuel, gas, groceries and (in June) restaurants are all represented. If you frequently dine out, this is going to be a powerhouse of a card for generating Membership Rewards points. And remember: Membership Rewards points can be transferred to various airline and hotel partners, meaning those extra points have a lot of potential.
  • No more foreign transaction fees: So many cards waive foreign transaction fees these days, that it’s possible you were using a different card for foreign purchases anyway – but now you can make those purchases with the Premier Rewards Gold and rack up Membership Rewards points. How much this benefit means to you depends how often you travel and how often you make online purchases from international merchants. It could save you absolutely nothing, or several hundred dollars a year.

In addition to these new benefits, the Premier Rewards Gold card has numerous other perks that add value, including roadside assistance (up to four times a year) and insurance coverage for travelers.

If you make use of the airline fee credit, use the card for purchases abroad, cancel your AAA membership due to the roadside assistance package, and rack up lots more points on dining, you could easily justify the annual fee on this card.

That, however, does not mean there isn’t a card out there that could be a better fit – and an annual-fee increase is a good reason to reassess your options. Here are some other cards to consider:

The Chase Sapphire Preferred ($95 annual fee, waived the first year): This card already offers 2X points on dining and on all travel, not just airfares purchased directly from the airlines. So, if you’re a frequent traveler, you might get more rewards out of this card.

It also offers the ability to transfer points to major airlines and hotels (the lineup differs from the Membership Rewards lineup, however). Its travel insurance benefits are robust. It also offers primary rental car insurance, which kicks in before your regular auto insurance, meaning you won’t have to file a claim with your regular insurer and risk higher premiums. The American Express Premier Rewards Gold, meanwhile, offers secondary insurance, which kicks in only after your regular car insurance pays out.

With an annual fee of $95, this may be the better option if you won’t use the airline fee credit on the Premier Rewards Gold – and if you frequently charge travel expenses that aren’t airfares.

The American Express EveryDay cards ($0 and $95 annual fee): If piling up Membership Rewards points is your goal, look into one of the American Express EveryDay cards (the EveryDay and the EveryDay Preferred), both of which have lower annual fees than the PRG.

The cards both offer bonus points at supermarkets, and the Preferred version offers bonus points on gas. What’s more, if you hit a certain number of purchases per billing period, you’ll start earning bonus points on all purchases. The cards don’t offer some of the more premier benefits the PRG does, but they’re a good way to amass Membership Rewards points at a lower cost.

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