When is renewing your high-annual-fee credit card worth it?

Do the math to see if the benefits you're using offset the cost of keeping the card

Stephanie Zito
Travel and cards writer
Travel expert who writes the "Have Cards, Will Travel" column for CreditCards.com

How to earn an exotic vacation at the grocery store

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Premium credit cards offer a lot of benefits – that’s why you signed up for a card that costs nearly $500 a year or more after all.

While these cards have the power to pay for themselves in the value of their benefit returns, the truth is that many of us don’t – and can’t – take advantage of all of these freebies, including cash back bonuses, complimentary elite status, lounge access, Global Entry/TSA Precheck credits and annual hotel anniversary stays every year.

It is normal to deliberate if it is worth continuing to pay for these spendy cards when the annual fee rolls around. The secret to determining if a high-fee card is right to keep in your wallet lies in doing a little bit of math at the end of each year to determine the card's actual value for you versus its perceived value.

Take these two actions to decide if that high-fee card is worth keeping:

  • Calculate the value of the benefits you are using.
  • Calculate a realistic future value of the benefits you’ll use.

 See related: When is a credit card annual fee worth it?

1. Calculate the value of the benefits you are using

To calculate the true value of a card’s benefits to you, review the card benefits on offer and compare them to those you have actually used in the past 12 months.

The formula is simple: The cost of the annual fee minus the monetary value of the benefits of which you took advantage.

Consider my own annual analysis:

On paper both cards have amazing benefits for travelers that easily cover the expense of the fee. For example:

  • The Amex Platinum card has the best lounge benefits out there (including Priority Pass Select), Global Entry reimbursement, free Boingo Wi-Fi and a $200 annual airline credit.
  • The Chase Sapphire Reserve has a $300 travel credit, Global Entry reimbursement, a Priority Pass Select membership, and 3x Ultimate Rewards points on all travel expenses.

Calculating what I used last year, it’s becomes obvious that I only need one Priority Pass membership and one Global Entry Reimbursement. At the same time, since Global Entry lasts five years, this benefit will have a $0 value for me the other four years I won’t use it.

While I did take advantage of both cards' travel credits and my American Express free Boingo Wi-Fi, it’s evident from my calculations that I’m not getting $1,000 in value by keeping both of these cards.

Since I use my Amex Platinum card much less than I use my Chase Sapphire Reserve, it’s clear to me which card I need to bid farewell.

For me, the biggest benefit I’ll be losing by canceling the Platinum card is my ability to access the American Express Centurion Lounge – but I can still pay $50 for a day pass when I want to get into the lounge and come out ahead financially.

Did you use enough of the benefits of your heavy-hitting card last year to exceed what you paid for the annual fee?

See related: Is it worth keeping the Chase Sapphire Reserve for a second year?

Did you use enough of the benefits of your heavy-hitting card last year to exceed what you paid for the annual fee?

2. Calculate a realistic future value of the benefits you’ll use

In addition to doing the math to see if you’ve gotten enough actual value from your card in the year that has already passed, you’ll want to look into your crystal ball, or at least your potential travel calendar for the year ahead, to calculate potential future use.

Consider this: Will you use the benefits enough in the coming year to exceed what you will pay for the annual fee to renew the card?

For several years, I was a cardholder of the Citi AAdvantage Executive World Elite Mastercard, paying $450 a year to access the American Airlines Admirals Clubs and to have the benefits of free checked bags and priority boarding on AA.

  • When I first got the card, and for several years of travel, the benefits calculation was in my favor. I was flying often and visiting the Admirals Club multiple times a month.
  • After flying American consistently, however, I actually earned a level of elite status that gave me even better benefits of priority boarding and complimentary checked baggage.
  • As I looked into my travel future, I recognized that I’d no longer need many of the benefits that I’d relied on from my credit card.

Since I had other options for lounge access through Priority Pass (from my Chase Sapphire Reserve), the benefits of my $450 Citi card no longer added up.

Even though this is a great card and had been a great fit for me for a season, it was time for me to close this AAdvantage card – or at least downgrade it to a no-fee Citi AAdvantage card.

See related: Best American Airlines cards

How to use savings from not paying a high annual fee

Less money spent on annual fees means more money for travel – or money to spend on annual fees to leverage different credit card benefits that will be of more practical use for your personal travel goals.

What will I do without the Amex Platinum and the Citi Executive AAdvantage cards in my wallet this year?

No matter what you decide is right for you to keep in your wallet this year, you can’t lose as long as you’re taking advantage of the great benefits these high-end cards offer!

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Updated: 03-25-2019