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Some credit cards offer a deal like:

  • Annual fee of around $450
  • 100,000 frequent flier points (worth $1000) if you spend $3-4k in the first three months
  • Get an annual travel credit worth about the same as the annual fee.
  • Get invites to flier lounges each year.

Here's a specific amex card I'm looking at.

On the face of it, this seems like an OKish deal, if I'm likely to to be using the travel credit each year (which I am).

Here are the potential downsides as I understand them:

  • If you happen to not travel one year, then it's expensive.
  • The travel credit is through their website, which can have higher prices.

Now that second point seems particularly important. However, this is offset by the 100,000 FF points, assuming you can cancel after the first year.

Is there something I'm missing, that I should look out for that might make these deals bad?

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The signup bonus is a great deal. The banks are betting you'll get addicted to the benefits, or have points left over at the end of the year, and pay the annual fee (which after all, is mostly balanced out by the perks) to avoid losing your point balance.

You could cash out, but nearly all the cards in that range significantly limit what you can do with your points to get the full value (frequently, only travel).

One thing to consider is to have a no-fee card that earns the same points, so if you decide to cancel the fancier card at the end of the year, you can consolidate your points and not lose them (but you will lose the more valuable ways to redeem).

Also, pay close attention to any clawback clause in the terms. Some cards can revoke your signup bonus if you cancel before 12 months are up. (Which doesn't mean you have to pay a renewal fee, since cancellation in the 13th month will usually get that refunded. Again, check the terms carefully.)

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