Is Paying a Travel Credit Card's Annual Fee Worth it?


Travel credit cards make it easy to earn points, miles or flexible travel credit for every dollar you spend. As long as you pay your bill in full every month, these rewards are basically “free,” right?

Unfortunately, that isn’t always the case.

Since many of the top travel credit cards come with annual fees between $89 and $550, earning rewards can be downright expensive. Here are signs you should pay your credit card’s annual fee versus indications you should cancel:

Pay Your Credit Card’s Annual Fee If:

—You’re taking advantage of your card’s earning capacity and bonus categories. If your travel credit card comes with a bonus category with higher earnings and you’re maximizing that category every month, your card’s annual fee could be well worth it.

—Your rewards eclipse your annual fee. Check to see how much you earned in rewards over the last 12 months. If you received hundreds or even thousands of dollars worth of rewards for a $95 annual fee, it might make sense to keep your card.

—You love your travel credit card’s added perks. Since top travel credit cards like the American Express Platinum card and Chase Sapphire Reserve tend to offer valuable benefits like airport lounge access, travel credits for upgrades and primary auto rental coverage, you can get plenty of value whether you earn rewards or not.

If you frequently take advantage of your card’s added perks, paying your annual fee could be a good deal.

Cancel Your Travel Credit Card If:

—Your spending doesn’t justify the fee. Most travel credit card annual fees are easy to justify if you use your card for thousands of dollars of expenses each month. But, if you don’t spend a lot, it’s harder to see the point.

If you’re spending less than $1,000 per month on your card for bills and regular purchases, most annual fees won’t be worth it.

—You would be better off downgrading to a no-fee rewards card. Some of the top travel credit cards let you downgrade or change to a no-fee or lower-fee version if you ask.

For example, you could downgrade from the premiere Chase Sapphire Reserve card with its $450 fee to a Chase Sapphire Preferred for $95 or a Chase Freedom card with no fee. If you’re not spending enough on your card to justify a huge fee, consider this option.

—You never use travel perks. If your travel credit card offers airport lounge access, travel insurance benefits or elite status with hotel chains or rental cars and you never use these benefits, it makes no sense to pay for them unless you’re earning enough rewards to justify the fee that way.

While it might seem crazy to pay for earning rewards, there are quite a few scenarios where paying your travel credit card’s annual fee could make sense. Then again, paying for rewards isn’t everyone’s cup of tea.

At the end of the day, only you can decide whether your travel credit card's annual fee is worth it.

Before you decide, make sure to weigh the pros and cons of keeping your card versus signing up for a card with a lower fee or product-changing to a similar product with the same bank.