Here's The No. 1 Drawback of Premium Travel Credit Cards

With a few exceptions, most travel credit cards have annual fees. The fee amount can vary quite a bit. There are lots of travel cards costing under $100. Some are in the $100-to-$300 range. And at the high end, you have the premium travel cards. The creme de la creme, so to speak.

Premium travel cards have the largest annual fees and the most benefits. I've been using them for a long time, and I've always considered them a good deal if you like to travel.

But to be honest, the features of many of these premium travel cards have been getting worse recently. If you're thinking about getting one, there's an increasingly common drawback to know about.

Spending credits of dubious value

Most premium travel credit cards have spending credits to balance out their annual fees. For example, a card may cost $400, but also include up to $300 in annual credits you can use in the card issuer's travel portal. If you use the full $300, then the card is really only costing you $100 per year.

The problem is that these spending credits are often hard to use -- and that's by design. For a credit card company, it's great to advertise that a card offers "$750 in annual value" based on all the spending credits it has. It's even better if the typical cardholder isn't getting the full $750 in annual value.

For example, one of my hotel credit cards recently raised its annual fee by $55. It also added $200 per year in spending credits for purchases at that hotel's properties. That's not a bad tradeoff, right? Except that $200 per year is actually a $50 credit every quarter. I now need to stay at this hotel at least once per quarter to maximize this benefit.

I've seen this happen with many of the most expensive travel cards. The card issuer raises the annual fee, and it adds spending credits to soften the blow. Only the spending credits are doled out in quarterly or even monthly increments, so you need to stay on top of them to use them. Or they're so specific that most cardholders won't be able to use them.

Pick a travel card that fits your needs

None of this means that getting an expensive travel card is a bad idea. Even after accounting for the annual fees, these cards can help you save money on travel, if you can use their benefits.

That last part is important. Don't put too much faith in the advertised value of a card. Consider how likely it is that you'll actually use a card's benefits. If a card has a $200 airline fee credit, but you're pretty good at avoiding airline fees already, then you shouldn't look at that as $200 in value. It's more likely that you won't use it, or that you'll need to force yourself to use it. In either case, you're not truly saving $200.

Look for a travel card that fits your lifestyle and spending habits. When I'm deciding whether to get a travel card, I'll go down its list of features and ask myself, "Will I use this?" If I find enough features that I expect to get my money's worth from the annual fee, then I'll apply for the card. If I need to think hard about how I'd use its intricate web of spending credits, then I rule it out.

The right travel card will be one with benefits that are easy to use. For example, an airline credit card for an airline you fly with several times per year. Or a travel card with spending credits in places where you already spend money regularly. The goal is to find a card that saves you money on travel and improves your travel experience -- not one that makes your life more difficult.