One of the most common questions in the game of points and miles are about annual fees and if they are worth paying every year. Yea, this card that has a great benefits and an all time offer, but is it really worth paying that high annual fee?
This is a very valid question and concern. And to be honest, and what many blogs will not tell you, in many cases it isn’t worth it.
An annual fees is the fee that the cardholder pays each year to keep the card open. Many cards with annual fees have benefits that the bank offers to entice people to open that certain credit card. Free nights, travel credits, airport lounge access, delivery service credits, etc. all are offered as benefits. There is always a cost-benefit analysis with whether to open the card given the points bonus offered, and then whether to keep it open or cancel the card down the road.
Here are some examples that better help explain a case of whether an annual fee is worth it:
To see a full list of credit cards available use this link to the best offers currently
Capital One Venture X
Annual Fee: $395
Benefits: $300 travel credit, 10,000 point anniversary gift (minimum cash value on this is $100), Priority Pass membership that gives access to many airport lounges, Global Entry/TSA Precheck $100 credit, Hertz President Circle (top tier with Hertz), and many more insurance type protections.
Analysis: The analysis here first starts with the 1-1 dollar to dollar breakdown. Here, we get a $300 travel credit that I know I will use over the year of traveling. Then, I weigh the $100 value of anniversary points and $100 credit for Global Entry/TSA precheck that are included which I know I will use. These three perks alone are a value of $500 for a $395 annual fee, plus all the other perks included that are harder to put a dollar value.
From this, I know that the Capital One Venture X is a keeper and worth the $395 annual fee for me. Now, this analysis is a case-by-case basis. What if you only travel once or twice a year? Is the $300 travel credit really worth it? If you have a family, is TSA Precheck/Global Entry worth it if only one of you is using the credit? These are the types of questions that are crucial in deciding if the annual fee is worth it for your situation.
Advice: Keep
Marriott Bonvoy Boundless
Annual Fee: $95
Benefits: One 35,000 point free night certificate each year and automatic silver status
Analysis: The hotel cards are always my favorite case studies. They are much easier to explain than a card with multiple perks. The analysis is as easy. If you think you will use the Free Night Certificate over the next calendar year, the card is worth it. Most all Marriott hotel rooms are more than $95 nowadays, so at minimum you are saving money there. Then, if you take it to the next level like I do, you try and find the best value and how to save the most money.
The main question goes back to: Am I going to be staying in a hotel room this next year? If the answer is yes, then the card is worth keeping open and paying that $95 annual fee for a $200-$300 per night hotel room.
Advice: Keep
American Express Platinum
Annual Fee: $695 (you read that right….)
Benefits: $200 hotel credit, $200 airline incidentals credit, $240 entertainment credit on Hulu/Disney+ (in $20 per month increments), $15 per month to Uber/UberEats, Walmart+ subscription, Clear Membership
Analysis: This is the part that becomes overwhelming. Some people love this card and make it a point to take advantage of all these different benefits, but I find it a headache to keep that all in order. I can’t even justify myself getting this card and paying that annual fee. And that is coming from someone who is deep into this game. The $695 is just too much of a sticker shock value for the effort to get the value.
In this industry, this card is called the “coupon book.” That is because all of the different credits you basically have to scheme per month to use. I do not value the Clear membership or Walmart+ to make that high annual fee worth it. There are probably some reading this that disagree with that take, but that is my situation. Each is different and each situation will have their own calculation of how much value you place in all the benefits.
Advice: Cancel
Even with all of that said, there are still options out there for no annual fee credit cards. Currently, there are some great bonuses going on where you still earn a sign up bonus, but then you do not have to worry about an annual fee. These cards will not have that big of a sign-up bonus or that many perks, but these are great for building credit or building up points without a fee. Check out my Best Cards page for some of the current offers for the no annual fee cards.
The biggest takeaway from this article is do not let the sticker shock of an annual fee instantly scare you away from a credit card. Each card has their pros and cons, and there are some that will be worth it even if it is a large hit each year. The hotel cards, of any brand, have their basic card that is worth their annual fee. Then, there are other cards where you will never be able to find the value. No matter the cost of the annual fee, each person will need to make their own determination of what perks and benefits you value. That will give a calculated analysis and come out to whether that annual fee is worth it or not.
