Is A Credit Card Fee Worth It? Work Out Your Break Even Point

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If you’re a true miles and points enthusiast your wallet is almost certainly crammed full of credit cards that have one purpose or another in your life. You may use most of your credit cards on a daily basis or you may have a core few that you use from day to day with the rest only appearing when a specific need arises, but one thing is for sure – you pay annual fees on a good number of your credit cards.

Annual fees are something that most of us accept as a cost of enjoying this hobby/game/obsession but it’s important not to just dismiss them as a necessary evil.

A hugely important part of the miles and points hobby is paying as little as possible for the most comfortable travel we can book, and part of that effort to keep costs down should include ensuring that we’re not paying any more in annual fees that absolutely necessary.

I think you’d probably be surprised how many people pay their credit card annual fees year after year without seriously considering what exactly they’re getting for their outlay…..and quite often they’re not getting very much at all.

Credit Cards

Valuing My Credit & Charge Cards

With everything I’ve already said in mind, I want to share how I think about my annual fees when they come due and hopefully give some of you an idea of what you should probably be considering before you give the credit card companies any more of your cash.

Firstly I should say that I always try to get my annual fees waived (usually by calling up and saying that I’m considering cancelling the card) but, when that doesn’t work, I have to work out if the cards are worth keeping.

I have a number of credit cards that come with an annual fee but three of them in particular come with some of the highest annual fees you’ll find.

  • Amex Platinum (personal) – $550 annual fee
  • Chase Sapphire Reserve – $450 annual fee
  • Citi Prestige – $450 annual fee

While I force myself to justify each and every annual fee I pay these cards always get the most scrutiny from me – they’re expensive.

I hold each of these cards for a reason (or at least I had a reason to hold them when I applied) but I’m aware that the cost of holding these cards is high so I have to be able to justify keeping the cards every year.

I have a very simple process that I go though (at least once a year) to force myself to think about the credit cards I hold and to see if I’m spending cash on annual fees that I really cannot justify spending.

  • I remind myself why I wanted the card in the first place – did I intend to hold on to it or did I just apply for it for the welcome bonus?
  • I review the benefits that each card gives me and check which ones I still value and actually use
  • I assign a value to the benefits that I value and can honestly say that I use.

This process requires me to think hard about the benefits the cards provide and, if it is to be of any help at all, I have to be brutally honest with myself about just how useful the benefits are and how much value they provide me.

One of the big dangers with the more expensive cards is that people grow attached them and some even see them as status symbols (they’re not).

That kind of thinking leads to irrational decision making and it’s what leads card holders to persuade themselves that they really do get value out of a card that, in reality, hasn’t provided value for years.

Let’s take the Amex Platinum personal card as an example.

a hand holding a credit card

This card comes with a host of different benefits and their usefulness will vary from cardholder to cardholder but, in my case, these are the benefits I use and, alongside them, are the values I assign to those benefits:

  • $200 Airline fee credit – $180 value (the credit isn’t as easy to use as the credit on other cards so it’s worth below face value to me)
  • $100 Global Entry credit – $20 value (I only need a global entry credit once every five years so I apportion the $100 credit across the 5 years)
  • $15/month Uber Credit with $35 credit in December – $65 value (because I travel outside of the US quite a bit and because the credit is only valid within the US this benefit is worth well below face value to me)
  • Amex Centurion Lounge Access – $75 value (I don’t pass through Dallas or Miami anywhere nearly as often as I used to and that’s where I used to get most of my value – with my usage of the lounges now down to just a few times a year the benefit isn’t as valuable to me as it once was)
  • Amex Offers – $50 value (I can see how much Amex Offers have saved me over the past 12 months and, on my Platinum Card, it was $50)
  • 5 Membership Rewards Points per dollar spent with airlines – $0.075 of value per dollar I spend (I value Membership Rewards points at $0.015 cents each)


The value I assign to the benefits I get from the card comes to $390 + whatever I get from my Membership Rewards Points.

With an annual fee of $550 this means that I need to get $160 of value in the form of Membership Rewards Points just to break-even on the annual fee.

To earn $160 of Membership Rewards points I have to spend $2,134 on airfare directly with airlines ($160/$0.075).

I easily spend that on my own airfare each year and, as I also get to charge Joanna’s and mini-Joanna’s flights to my Amex Platinum card too, I clear the break-even point comfortably.

Note that I haven’t ascribed a value to benefits like Amex Fine Hotels & Resorts, the concierge service, Priority Pass membership or any of the insurances that come with the Platinum card as they’re not all that important to me and have little bearing on why I hold the card.

Some of these benefits may come in useful every now and again but not often enough that they merit a valuation.

a close up of credit cards

Bottom Line

If you only hold one or two credit cards then keeping track of what you’re paying for is relatively simple…but when you have 15, 20 or even 30 different credit and charge cards then it becomes imperative that you review what it is you’re paying for year after year.

I’m not suggesting that the methodology I’ve outlined above will work for everyone (it probably won’t) but what I am suggesting is that you should always consider closely and honestly what a card is giving you before you blindly pay another annual fee.


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