Are High Annual Fee Credit Cards Ever Worth It?

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In a world where countless credit cards without annual fees exist, it might seem like a waste of money to have a credit card that charges you anywhere from $49-$500+ every year just for the benefit of having that card.

Annual fees are not too popular among credit card issuers, as a 2017 survey of 100 credit cards found that just 24 charged annual fees (and 9 of those 24 reduce or waive the annual fee during the cardholder’s first year of use).

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On the surface, credit cards with annual fees don’t seem to be worth the expense, but here’s the catch. A credit card with an annual fee will likely offer significantly more rewards than a no-fee card, which could actually end up saving you more money than you pay for the annual fee.

If you’ve considered applying for high annual fee credit cards (and you have a high enough credit score to qualify for one), then here are some things you should consider before taking the plunge:

Do You Frequently Spend on Certain Categories?

Some cards with annual fees offer higher points on certain spend categories, especially when it comes to travel and dining. For example, the Capital One Venture card ($95 annual fee; waived the first year) offers 2X miles for every $1 spent (all purchases) and 10X points on every $1 spent on a booking at

Then there’s American Express’ Blue Cash Preferred® card ($95 annual fee), which offers 6% cash-back on purchases made at grocery stores and supermarkets (up to $6,000 annually) and 3% cash-back on every $1 spent at gas stations.

There are few no-annual-fee credit cards that can compete with these generous point/mile earning opportunities. In addition to ongoing cash-back, points, and miles accumulation, credit cards with annual fees also typically have higher introductory bonuses.

For example, the Sapphire Preferred ($95/year – waived the first year) offers a bonus worth $625, while the Sapphire Reserve ($450/year) offers a bonus worth $750 (both require cardholders to spend $4,000 in the first 3 months of owning the card).

Ultimately, it’s important to really consider how much you spend on these categories each year to determine whether or not the points/miles potential outweighs the cost of the annual fee. 

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What Are the Non-Point Perks?

Credit cards with annual fees offer so much more than higher points/miles earning potential. Depending on the card, some of these additional perks may include:

  • Extended warranties on items purchased with the card
  • Car rental insurance
  • Roadside assistance
  • Airport lounge access (reduced rates or free-of-charge)
  • Free checked baggage
  • Free companion ticket (on airlines) or free seat upgrades (when available)
  • Trip delay reimbursements
  • Concierge services
  • Travel reimbursements
  • Statement credit for UberEats ($10/month with certain Amex cards)

For example, the Amex Gold Card ($250 annual fee) offers $100 statement credits for airline fees each year, in addition to its 3-4X points on dining/supermarket/travel expenses. Then there’s the Sapphire Reserve card, which offers annual statement credits for $300 worth of travel expenses (flights, Airbnbs, hotels, etc.), $100 application fee credit for TSA Global Entry, and free membership in Priority Pass™ Select (worth $249/year), which gives you access to more than 1,000 airport lounges globally.

Before you even take the card’s point-earning potential for every $1 spent (3X for dining/travel, 1X for everything else), Chase’s Sapphire Reserve card offers at least $649 worth of perks (which significantly outweighs the $450 annual fee).

How High is the Annual Fee?

Calculating the potential rewards is crucial for anyone considering a credit card that comes with a high annual fee. If you don’t travel much, then there’s no point in wasting even $95/year for a card that offers generous cash-back rewards on travel-related purchases. If you don’t dine out very often, then why pay so much money in annual fees towards a card that offers statement credits or higher points rewards on restaurant and bar purchases?

If you’re still on the fence about credit cards with annual fees, then perhaps you could start with a card that waives the annual fee in the first year, just so you can decide whether or not you will actually benefit from the card’s exclusive perks.

Is It a Business Card?

Did you know that businesses can write off credit card fees, including annual fees? There are some limitations to this, of course: you can’t write off the annual fee on a personal card that you sometimes use for business-related expenses. To be safe, don’t count the annual fee as a tax write-off unless it’s a business card used exclusively for business purchases.

Should You Get a Credit Card with an Annual Fee?

As you can see, credit cards with annual fees shouldn’t be dismissed just because there’s a steep cost associated with using them. On the flip side however, it’s important that consumers avoid falling into the trap of applying for a card they won’t actually benefit from, just because they were initially dazzled by the potential rewards.

Ultimately, it’s up to you to look at your budget, figure out which categories you spend heavily on, and determine whether or not the possible rewards are worth more than what you’d pay for the annual fee.

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