Why Should You Pay Annual Fees for Credit Cards?

Getting into the habit of paying annual fees on credit cards, when they’re worthwhile, is a natural part of progressing from a beginner Miles & Points collector to a more advanced user.

However, there’s undeniably a bit of a mental block that needs to be overcome at the start in order to get “comfortable” with paying significant sums of money for the privilege of getting a credit card.

In this article, we’ll look at many of the reasons why it’s worthwhile to pay annual fees as you seek to earn points, and what steps can be taken to soften the blow and make the higher outlays easier to swallow.

The Points Outweigh the Cost

The general principle is that credit card annual fees are easily justifiable if it’s outweighed by what you receive in exchange on the card, which usually takes the form of a generous signup bonus.

The two most noteworthy credit cards in our space with high annual fees are probably the American Express Business Platinum Card and the American Express Platinum Card.

The former comes with an annual fee of $499, which you pay upfront on the first statement, while the latter has an even higher price tag of $699, although the $200 annual travel credit (which can be converted to cash) brings that down to a net $499 as well.

So, you’ll find yourself at least $499 out-of-pocket in applying for each of these cards. What do you get in return?

The first factor to consider is the amount of the welcome bonus, including the number of points you’d earn from meeting the minimum spending requirement (if any).

If you were to, say, redeem the points for travel in a premium cabin, you’d likely be unlocking a significant amount of value, which could be much higher than what our Points Valuations might predict.

But perhaps you aren’t quite certain what you’ll be willing or able to redeem them for in the future. It might therefore be more useful to think about the minimum value of the welcome bonus.

For example, if a welcome bonus on one of the cards is 100,000 American Express Membership Rewards points, you’d be getting at least $1,000 of value from the welcome bonus if you were to redeem them for a statement…