Which Credit Card Should You Use to Pay Award Taxes & Fees?

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With such a large variety of credit cards now aimed at the travel market, it can be confusing trying to decide which card to use for particular circumstances. One of the scenarios we get asked about on a regular basis about redeeming rewards:

Which credit card should I use to pay award ticket taxes and fees?

Without hesitation, there are three cards we recommend for paying the fees and taxes on award stays and flights; the Chase Sapphire Preferred® Card, the Sapphire Reserve, or the Citi Prestige® Card.

Not only do these cards offer some of the best travel insurance benefits of any credit card available today, but they will also earn bonus rewards points on travel spend, and you only need to book a portion of the travel using either card (or its reward points) for the insurances and benefits to apply.

Credit Cards

Paying Award Fees and Taxes with the Sapphire Preferred, Sapphire Reserve, and Prestige Card

Equal parts art, voodoo, and science, searching for award bookings with low fees and taxes is one of the most time-consuming activities when redeeming points and miles. It can require hours of searching different routing, over multiple carriers, figuring out how to get points from program A to program B and occasionally on to program C without losing any value; value that is often measured down to the 100th of a cent.

What makes the Sapphire Preferred, Sapphire Reserve or the Citi Prestige® Card, better than the American Express® Gold Card? It’s all in the details.

While most travel-focused credit cards offer travel insurance of some description for being a cardholder, they each differ slightly. Amex has strong travel protection and benefits, but you only qualify for benefits such as Trip Delay and Baggage Delay coverage if you stick within the Membership Rewards programs.

Chase and Citi, on the other hand, allow you to book award travel using frequent flyer miles or rewards points from any program. And, as long as you use your Sapphire Preferred, Sapphire Reserve or Prestige Card to pay a portion of the ticket (in this case, the fees and taxes), you’re covered under the travel insurance and benefits of the card.

UPDATE: Coverage on the Barclaycard Arrival Plus® World Elite Mastercard® has been updated to include Trip Delay insurance and updates to some of the benefits. Insurance on this card will now cover award fares where a separate rewards currency is used, and the taxes and fees paid for with the Arrival Plus.

As an example, we’ve clipped the exact wording from the terms and conditions of some of the cards that qualify for Trip Delay Insurance and included them below.

Sapphire Preferred + Sapphire Reserve

“To be eligible for this coverage, you need to purchase either a portion or the entire cost of your Common Carrier fare using your Account.”

The Chase Sapphire Reserve Benefits Guide
The Chase Benefits Guide for the Sapphire Reserve shows the best coverage when paying award fees and taxes via credit card

 

Citi Prestige® Card

“…all or at least a portion of the cost of the Common Carrier fare was paid using your Citi card and/or ThankYou® Points for all Covered Travelers. .”

American Express® Gold Card

“To be covered, you must pay the Entire Fare for travel on a Common Carrier (e.g. plane, train, ship, or bus) with your eligible Card. Entire Fare means the full fare cost for a Covered Trip on a Common Carrier.”

Barclaycard Arrival Plus® World Elite Mastercard®

“You must purchase the trip entirely with Your covered card for You, or Your family member, and Your traveling companions. If redeemable certificates, vouchers, coupons, or discounts awarded from frequent flier programs are used to purchase the trip, any remaining charge for the trip must be purchased entirely with Your covered card.”

Final Thoughts

As the saying goes, the devil's in the details, and when you start examining the wording of each policy, the cards from Chase, Citi, and Barclaycard offer a way of covering your trip just by paying the fees and taxes on an award ticket, or by using any portion of points from their respective program!

One more thing worth adding is the $300 travel credit you receive as a Sapphire Reserve cardholder, as it takes this convenience to a whole new level.

In the case of the Sapphire Reserve, the fees and taxes on award bookings will credit as travel spend, automatically qualifying for a statement credit using the $300 Travel Credit that is one of the cards highlights, and another reason the Sapphire Reserve has become such a sensation amongst the points and miles crowd.

How does this work in practice?

Book an award ticket using points or miles from any loyalty program, pay the award fees and taxes with your Sapphire Reserve, have the charges credited back to your account using the $300 travel credit, and you have genuinely free travel covered with the best trip protection available.

For those not confident they will take advantage of all the benefits of the Sapphire Reserve, we still rate the Sapphire Preferred as the best beginners card out there and with benefits like those above, it’s easy to see why!

Which Credit Card Should You Use to Pay Award Taxes & Fees?
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Comments

  • Thanks, although I understand that as of April 2016, the Citi Prestige’s travel protections also apply if only a portion of the fare was paid for on the card or via Thankyou points:

    http://i.info4.citi.com/wpm/100164/PDF/Guide11.pdf

  • Chase Sapphire Reserve for anything remotely related to travel, since you never know how it might code. 3x URs, which I value at more than 2 cents each, is like getting $0.06 per dollar back on travel.

  • Michael Herbert says:

    Just a note on the Chase cards. They aren’t as good as people say and you need to read the fine print very carefully. They have two types of claims – delay and cancellation/interruption. They don’t cover mechanical delays and only one cover children over 21. AND you better have all your receipts for your expenditures. I don’t mean the CC charge I mean the itemized receipt like what you ate for lunch.

    I encourage people to read the actual brochure for their CC carefully if you are counting on this benefit.

    I learned from a 17 hour flight delay on Hawaiian (BTW #1 worst customer service in my entire life) which was due to a mechanical.

    So just read and be prepared.

    • Michael Herbert says:

      I also forgot to mention on my previous comment. Chase does not cover prepaid expenses on Trip Delay – so no matter the cause – weather, strike, or mechanical for a Delay you don’t get a lost hotel or AirBnB. Trip Cancellation would cover it but only if weather or strike, not due to change by a common carrier. So as you can see it’s complicated.

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