With fees ranging from $99 a year to almost $700 a year, it's easy to get a little sticker shock when you look at credit card annual fees. But for me, the calculus is simple: The return from my travel rewards credit cards was worth way more than what I pay in annual fees every year. It's as simple as that.
Just the term “fees” used to strike fear into me when I was a points and miles novice, but I've come to realize that those fees are just investments into your future travel. And if you maximize your card's benefits, you are going to come out ahead, and sometimes way ahead.
For example, right now, my credit cards with annual fees are paying for the following things in my life:
- A New York Times subscription
- Up to $200 in Uber credits per year (including Uber Eats)
- A $300 travel credit when booking through Capital One Travel
- A free checked bag (insured in case of loss or damage), including my ski bag, on any Delta flight
- Airport lounge access to hundreds of lounges worldwide
- Elite status with Marriott, Hilton, Avis, Hertz, and National Car Rental
- $50 back on any hotel booking (booked through the Chase Travel Portal)
- Up to a $200 hotel credit for Amex Fine Hotels & Resorts or the Hotel Collection
- Rental car insurance
- Free delivery on DoorDash via a complimentary DashPash membership
- Free delivery on groceries via a complimentary Instacart+ membership
- Up to a $200 airline incidental fee credit (I chose Delta)
- Up to $100 to cover the cost of Global Entry (or TSA PreCheck)
- $179 towards CLEAR Plus memberships for my wife and I
- Up to $100 back at Saks Fifth Avenue
- A Delta Air Lines Companion Certificate
All of this alone might add up to break even on the annual fees I paid for those three credit cards. And that's before you add in any welcome bonuses.
Sign-up Bonuses and Annual Fee Cards
Ultimately, any credit card sign-up offer worth anything is going to come from a card with an annual fee. Most travelers will look at the offer and only see the cost associated with the card's annual fee.
I got over that by understanding how much 60,000 Chase Ultimate Rewards points or 80,000 American Express Membership Rewards are really worth.
The *chase sapphire preferred*Â is a perfect example of this. Right now, you can earn 60,000 points after you spend $4,000 in the first three months. The points, which are Chase Ultimate Rewards, come out to be worth a minimum of $750 towards your future travel – and potentially much more.
The annual fee on the Chase Sapphire Preferred? $95.
Think of it this way: If you're confident that you can hit responsibly that $4,000 with your everyday spending, you're investing $95 this month to earn $750 towards future travel once you meet the spending requirement.
Worried about hitting that spending bonus? We have some tips for that
My napkin math shows that by opening the Chase Sapphire Preferred and hitting that spending bonus, I'm coming out $655 ahead ($750 – $95 = $655), and that doesn't include the points you are earning on the spending to hit that bonus. At a minimum, you'll have a minimum balance of 64,000 Chase Ultimate Rewards points after spending $4,000 in the first three months.
Another good example of how quickly and easily you can come out ahead on annual fees is with the Preferred's older sibling the *chase sapphire reserve*.
At a price tag of $550, it's an annual fee that can have travelers retreating to lesser cards. But, do the math! It's really more like a $250 annual fee.
That's because the card comes with a $300 annual travel credit that applies to any travel purchase you make on the card. So, any plane ticket, Uber ride, hotel reservation, rental car, parking charge, etc., will be covered by that $300 credit. All of those purchases, up to $300, will be automatically reimbursed on your card. You don't have to do a thing.
Once you redeem that $300 travel credit and earn your sign-up bonus worth $750, you'll be well ahead of the $550 fee.
But still, we always suggest starting with the Sapphire Preferred. You'll earn more points from the start, and if you decide to upgrade to the Sapphire Reserve later, those additional points will be worth more.
The *venture x*, which is a staple of my wallet, comes with a $375 annual fee that is nothing to scoff at. But that card also comes with a $300 travel credit, knocking that fee down to $75 total so long as you remember to use it.
Travel Expenses
If you're just looking at travel costs and annual fees, it's clear you can come out ahead with these cards, and that's not taking into account all of the sweeteners that annual fees on premium credit cards can offer.
Remember that big list of all of the things that my annual fee cards pay for in my life, above? One of my favorite perks is airport lounge access.Â
While they might project a fancy or expensive vibe, airport lounges can be a cost-effective way to travel. Gone are $11 bland margaritas from airport restaurants, $4 bottles of water to take on the plane, and a $17 soggy basket of burgers and fries to sustain you on your travels. Once inside, airport lounges offer complimentary food and beverages, plus a more stylish and comfortable experience.
The value of airport lounge access depends on how often you fly and how thrifty you are as it relates to eating in transit, so it's hard to put a dollar amount on it, but for many travelers, the access is worth it.
See our list of the best credit cards for airport lounge access!
If you're looking for your annual fee card to cover other travel expenses for you, you're in luck. Seven different cards cover the cost of Global Entry or TSA PreCheck and the *amex platinum* covers the cost of CLEAR, too.
One aspect of annual fee cards that should not be overlooked is baggage fees. As a skier, I often find myself unable to travel without bags, so the cost of an annual fee card that covers baggage is well worth it for me.
My *delta skymiles gold card*Â comes with an annual cost of $99 (see rates & fees). To check a bag with Delta is $30 each way so if I take two trips per year in which I have to check a bag, that would cost me $120. All SkyMiles Gold cardholders get one free bag on any flight. That means if I bring my skis or golf clubs with me on just two trips per year, the annual fee of the Delta Gold card is worth it.
And critically, you don't even have to pay for the flight to get the benefit. Since the card is tied to my SkyMiles account, I get the benefit automatically.
United and American Airlines both offer similar co-branded credit cards that give travelers one free bag on each flight, so no matter what airline you fly, you can recoup the cost of that annual fee in just a few trips!
The Sweeteners
Besides lounges, credits for other everyday spending items can chip into that annual fee, too.
The *amex platinum*Â has one of the highest annual fees of any premium credit card at $695 (see rates & fees). But it also offers an exhaustive list of perks. I added this card to my wallet after realizing how many expenses in my life it would cover, despite its hefty $695 annual fee.
One of them is a digital entertainment credit. The card covers up to $20 per month of your subscription to one of the Disney Bundle (Disney+, Hulu, and ESPN+) New York Times, Peacock TV, SiriusXM Radio, or Audible. As a subscriber to the New York Times news, cooking, and games, my subscriptions are completely paid for each month, with the rest of the credit going toward Peacock and SiriusXM Radio. It almost covers all three memberships.
Use Uber to get around? The Platinum card's up to $15-a-month (and $35 in December) Uber credit can be super helpful, too. Recently, I took a $16 Uber ride to the airport that cost me just $1. Cheaper than the bus!
Plus, the Uber credit can be used for any of Uber's products, including Uber Eats food delivery or e-scooters in participating cities.
The American Express Platinum Card offers $300 at Equinox gyms. If I lived in a city with an Equinox gym, this could take some of the sting off their pricey memberships.
Read next: Last Call: Use These Credit Card Perks Before the End of the Year
Bottom Line
Credit card annual fees can be scary! The things we're charging to our cards are expensive enough without seemingly having to pay for the card itself. But, if you do the math, get organized, and milk the value from these expensive pieces of plastic, these cards can put you way out ahead for all sorts of things.
Let's take my recent trip as an example. I used my annual fee credit card to make my $16 Uber ride to the airport a $1 ride. Then, I used that same card to get into an airport lounge, where I treated myself to a coffee, a tomato bisque, a Caesar salad, and a soy-ginger salmon entree for exactly $0. I later washed it down with a beer. The cost? Also $0.
By the time I got to my plane for my flight, I had spent a whopping $1 on travel expenses thanks to my annual fee card.
I usually travel once or twice a year so my CIP is my only fee card. Just closed my JetBlue Fee card. May look into another if my travel increases.