What’s the Best Card for Paying Taxes and Fees on Award Tickets?

Feb 1, 2018

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“Reader Questions” are now answered twice a week — Tuesdays and Thursdays — by TPG Assistant Editor Brendan Dorsey. Brendan has been with TPG for a year and a half and hails from Northern California.

For those in the points and miles hobby, one of the best feelings is finding saver award availability and redeeming those hard-earned points and miles for a flight or hotel. Although, this can sometimes be a bittersweet pill, as award flights do have the unfortunate addition of taxes and fees. TPG reader Blake recently wrote in asking how to best pay for these fees:

Does the American Express Platinum card give 5x points on airline taxes and fees for award tickets? Or should I use the Chase Sapphire Reserve, netting 3x points?

TPG Reader Blake

So, Blake, you want to know what makes more sense when paying the taxes and fees on an award flight:  The Platinum Card® from American Express or the Chase Sapphire Reserve?

Well there are a few things you’ll want to consider. First, the specifics of the category bonuses are important. The Amex Platinum gets 5x points on all airfare purchased from the airlines or through Amex Travel, while the Chase Sapphire Reserve gets 3x points on all travel and dining purchases.

At first glance, it may seem like the Amex Platinum is an obvious choice. But there’s more to it than just how many extra points you’ll receive. Amex Membership Rewards points are actually worth less than Chase Ultimate Reward points, according to TPG’s latest monthly points valuations. Based on those valuations, Membership Rewards points are worth 1.9 cents a pop, while Ultimate Rewards come out to 2.1 cents each.

Amex states the Platinum card will only get 5x points on airfare purchased directly through the airlines or through Amex Travel. But does Amex count award taxes and fees as “airfare?” According to multiple data points on FlyerTalk as well as TPG staff members’ own Amex Platinum accounts, taxes and fees will code as airfare.

We can do the math comparing the Amex Platinum and Chase Sapphire Reserve, and throw in a similar “premium” credit card, the Citi Prestige, which we’ve seen code taxes and fees as air travel eligible for 3x points. Let’s assume Blake’s taxes and fees come out to $200 for his award ticket on an international round-trip itinerary.

Card POint Bonus Point Value points earned Value earned
Chase Sapphire Reserve 3x 2.1 cents 600 $12.60
American Express Platinum 5x 1.9 cents 1,000 $19
Citi Prestige 3x 1.7 cents 600 $10.02

We can see the Amex Platinum will net Blake a whole 400 points more than both the Reserve and Prestige. And he’s not just coming out ahead in points earned, but also in value. By using the Platinum, he’s getting 50% more value than he would with the Reserve and nearly 90% more than the Prestige.

Still, there’s a more important factor when choosing what credit card you want to use when paying for the taxes and fees on award tickets. Baggage and trip delay insurance can be hugely valuable benefits, and some card policies stand out more than others.

Those insurance policies do apply to award tickets, but only if you pay with the Reserve or Prestige. Amex requires you to pay for the full cost of your ticket if you want any of its travel protections.

Stressed, tired or ill woman at the airport
Image courtesy of kieferpix via Getty Images

Many of TPG’s flights are booked with points, but he pays with the Citi Prestige because of the fantastic trip delay insurance that the card offers. If a flight is delayed for more than three hours, Citi will reimburse you up to $500 dollars in eligible expenses. The Sapphire Reserve’s insurance, meanwhile, kicks in after six hours.

It’s even worse with the Platinum, as it doesn’t even come with trip cancellation insurance, just coverage for lost baggage and travel accidents. Both the Sapphire Reserve and Prestige offer trip cancellation and interruption insurance, along with baggage and accident insurance. The Reserve has the best policy when it comes to trip cancellation, with $10,000 per person per covered trip.

And if you’re not a premium credit card holder, mid-tier cards like Chase Sapphire Preferred and Citi Premier Card also offer some trip delay, cancellation and baggage insurance — although the policies aren’t as generous. Even co-brand cards like the Citi / AAdvantage Platinum Select World Elite Mastercard and United MileagePlus Explorer Card offer coverage.

So Blake, it comes down to what you value more: the couple extra dollars in points you’ll get from your Amex Platinum, or the Chase Sapphire Reserve’s 3x points plus all its extra insurance features. Personally, I’d book with the Sapphire Reserve, since you’ll have the peace of mind knowing you’re insured, and you’ll still earn bonus points.

So, do the math with on how many points you’ll earn and make sure you examine your credit card’s trip insurance policies before booking. Thanks for the question, Blake, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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