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When is a credit card annual fee worth it?

Before shelling out up to three figures per year for a rewards card, be sure it meets your spending needs and offers perks you’ll use


An annual fee might be worth it if you can justify it with your spending habits and benefits structure. But how can you tell if a premium rewards card is right for you? Ask yourself these six questions before signing up.

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Committing to paying hundreds of dollars a year in annual fees just to own a high-end card may sound crazy to some.

But a growing number of people – myself included – are happily shelling out $100 to $500 a year or more for lucrative cards that promise huge sign-up bonuses and perks that are often worth three figures themselves.

How can you tell if a premium rewards card is right for you?

As is usually the case with credit cards, it comes down to your spending habits. If an annual fee credit card perfectly complements them, it can bring a lot of value, despite the fee.

Still, these cards aren’t for everyone. To get the most out of a premium rewards card, you often have to be very organized and pay attention to your spending to recoup the cost of the annual fee.

Read on to learn how to determine whether an annual fee credit card is right for you.

Why spend money on a premium rewards card?

The latest generation of premium rewards cards aren’t just empty status symbols. Many of the best cards offer so much value that even Gen-Zers and millennials, traumatized by the multiple financial crises they’ve lived through, are snapping them up.

According to travel blogger Rand Shoaf, the savviest cardholders see premium rewards cards as an important tool for saving money, rather than as glitzy status symbols that help you flaunt your wealth.

Meanwhile, credit card issuers have taken notice and have begun crafting rewards programs with increasingly lucrative perks. The freshly revamped Chase Sapphire Reserve, for example, is so famously popular with millennials and other value-conscious consumers it has helped trigger an arms race among rewards card issuers.

That has sparked a trend toward high-value benefits, such as travel credits so generous they help cancel out the annual fee.

Meanwhile, American Express’ line of cards – which have long reigned as a favorite among affluent customers – have also become increasingly valuable in recent years as the issuer adds contemporary perks, such as Uber credits.

Shoaf says he’s been surprised by how many people he knows who are carrying around cards that cost three figures a year.

“Before, people would shake their head at that,” says Shoaf, who runs the travel rewards blog Well Traveled Mile.

But now, people are increasingly recognizing they can save a significant amount if they’re willing to invest some money upfront.

How to find a premium card that’s right for you

Not all premium rewards cards are a good deal, though, so it’s crucial to do your research before you settle on a card.

Some cards offer more pizazz – and heavily marketed metal – than rewards substance. Others are great for frequent travelers but are grossly overpriced for everyone else.

To find a card that’s worth paying money for, you’ll not only want to think about what kinds of rewards programs you’d enjoy. You also need to think about whether you’ll be able to take advantage of all that a card has to offer.

Sleek perks such as airport lounge access may sound exciting. But if you’re never in an airport long enough to spend more than a few minutes in a lounge, then that perk will just go to waste.

“A lot of times, people will get caught up in the promotions,” says Mero Geesey, a travel expert who helps clients book trips with their rewards points. But, “you really have to be careful. It may sound better than it actually is.”

6 questions to ask yourself before signing up for a premium rewards card

1. Can you afford the card’s sign-up bonus?

Cards that charge an annual fee often lure new cardholders with juicy sign-up bonuses that can add up to hundreds of dollars in free travel or other perks. Some cards also waive their annual fees in the first year, making them even more lucrative. But they also frequently require a ton of spending in your first few months of card ownership.

The more expensive the card, the more you’re typically asked to spend to earn a bonus. For example, you could be asked to spend anywhere from $3,000 to $5,000 within the first 90 days of opening your new card. If you can’t afford to spend that much at one time, you could wind up foregoing the bonus altogether – or racking up more debt. At the same time, if you miss on earning the sign-up bonus, you miss one of the best opportunities to rack up a large number of points on the card at once.

2. Do the bonus categories match your spending habits?

A big sign-up bonus and lucrative side benefits can only get you so far. If your new card doesn’t match your spending habits, then you may have a tough time holding onto it for more than a year.

For instance, if you’re looking for a card that rewards grocery spending, consider the Blue Cash Preferred® Card from American Express. If you also like going out to restaurants, maybe the American Express® Gold Card would suit you better. The right card for you should match your lifestyle.

Before you get too excited about a card’s promotions, think about your spending patterns. To help you zero in on a card that will give you the most bang for your buck, check how easy it would be for you to use the card’s benefits.

For example, many premium cards offer bonuses on travel, but their definition of travel may only include airfare booked directly with an airline or the issuer. Similarly, they may only let you use your travel credit on incidental airline fees, such as checked baggage. Other cards are more flexible with their definition of travel and will award bonuses on everything from public transportation to cruises, discount travel sites and taxis.

The Chase Sapphire Reserve card, for one, offers a broad definition of what counts toward its $300 travel credit. You can get reimbursed for everything from public transportation to highway tolls, parking and Uber. You might easily be spending $300 a year in those categories even if you don’t travel often.

3. Will you use the ancillary benefits?

This is, by far, one of the most important questions to ask yourself when evaluating a premium credit card. High-end cards are often packed with lucrative benefits that look great on paper but aren’t always very practical to use.

For example, some cards offer resort credits you can use to pay for massages or food, but the credits are hard to use because they are available only at select hotels, says Shoaf.

Similarly, you may find it tough to take advantage of an airport lounge if you’re always rushing to catch your connections or if your gate is far from the nearest lounge.

4. How often do you travel?

If you travel only occasionally or prefer more flexibility with your points, a general travel card that allows you to transfer points to other loyalty partners is likely your best bet.

“If you’re not a frequent flyer, you’re not locked down,” says Shoaf. “You can choose which airlines you want to transfer your points to.”

But if you spend a lot of time in the air and have a preferred airline, you may be better off with a co-branded airline card. Many airline cards with annual fees offer lucrative perks, such as complimentary or discounted companion tickets.

In addition, special perks, such as free checked baggage, can quickly add up – especially if you usually travel in groups.

Don’t feel like you need to spend money on a travel card if you rarely venture beyond your hometown more than a few times a year. These days, there are premium cards for a wide variety of spending categories, including restaurants and entertainment, groceries and gas.

5. What do you care about more: comfort or value?

Deciding whether a card is worth its annual fee also comes down to what you value and what you’re willing to spend money on. If you value luxury and comfort, for example, then you may be happier with a card such as The Platinum Card® from American Express, which offers plusher service and experiences for a $695 annual fee.

But if you’re eager to build a big collection of rewards, you may find the Platinum card disappointing. It only offers bonus points on flights and prepaid hotels booked with Amex Travel or directly with the airlines.

On the other hand, the Platinum’s “sister card,” the American Express Gold Card, doesn’t come with as many high-end perks but can offer great value with generous statement credits and rewards in lucrative categories.

I recently got it – couldn’t say no to the beautiful rose gold design option – and I already know I’ll be keeping it for a long time. The card comes with up to $120 in Uber Cash credits annually for U.S. Eats orders and rides ($10 per month; Gold Card must be added to the Uber app to receive the Uber Cash benefit) and up to $120 in dining credits annually (also $10 per month) for eligible restaurants and delivery services including The Cheesecake Factory, Grubhub, Goldbelly,, Milk Bar and select Shake Shacks (enrollment required). It’s now the highlight of the first week of each month for me, as I use these monthly credits as soon as they become available.

The card also offers 4 points per dollar on restaurant purchases (delivery and takeout included) and 4 points per dollar at U.S. supermarkets (on up to $25,000 in purchases per calendar year, then 1 point per dollar), so I can quickly earn rewards on my normal spending to later use for travel. Do you see now why I love this card despite its $250 annual fee?

6. Can you get similar benefits from a less expensive credit card?

As competition for new cardholders continues to heat up, lenders are increasingly adding lucrative perks to cards with lower fees. At one time, travel credits, such as application fee credits for TSA PreCheck or Global Entry, were typically found on premium cards with three-figure fees.

But now, even lower-tier cards, such as the Capital One Venture Rewards Credit Card and the Bank of America® Premium Rewards® credit card, are offering these kinds of perks. Bank of America’s $95-annual-fee premium card even offers up to a $100 airline incidental statement credit annually.

Another great example is the Chase Sapphire Preferred Card. At $95 per year, the newly updated card boasts excellent rewards rates (5 points per dollar on travel purchased through Chase Ultimate Rewards, 3 points per dollar on dining and 2 points per dollar on all other travel purchases) and now offers a $50 annual credit on hotel bookings made through the Ultimate Rewards portal. The annual credit alone covers more than half of the annual fee.

Bottom line

Before you apply for an especially pricey card, check to see if the perks you’re most excited about are available on a more affordable version. If you decide to embrace a more expensive card, be sure you’re getting your money’s worth. Once you realize a card can offer you the best value despite high fees without your having to adjust your spending habits, there’s no reason you shouldn’t go for it.

Ready for a premium rewards card? Check CardMatch to see rewards credit cards tailored to your credit profile without any impact to your credit. Your perfect match may be waiting for you!

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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