Are Credit Card Annual Fees Worth It? Here’s the Math
When you first look at travel credit cards, the annual fees can feel intimidating. $95, $395, $795, even $895 — seeing numbers like that on a piece of plastic is enough to make anyone pause and think, “No way I’m paying that!” It’s natural to wonder if the fees are really worth it, especially when you’re just starting out with points and miles.
The good news? Almost every annual fee is worth it in the first year. Many of these cards actually continue to pay for themselves year after year if you use the perks, travel credits, and points wisely. The key is knowing how to look at the numbers, understand the benefits, and make the math work in your favor. And you don’t need to start with the most expensive cards on the market. The best beginner cards are in the $95 price range.
In this post, I’ll break down exactly how to decide whether a card is right for you, using real-world examples, simple math, and beginner-friendly explanations. By the end, you’ll see that annual fees don’t have to be scary and that they can actually be your ticket to saving hundreds or even thousands on travel.
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Why Credit Cards Have Annual Fees
Annual fees exist for a reason: they fund the perks and benefits that make the card valuable.
For example:
Amex Platinum ($895) → lounge access, $200 airline fee credit, $100 Saks credit, 5x points on flights and hotels booked through Amex, elite status with Hilton and Marriott.
Chase Sapphire Reserve ($795) → $300 travel credit, 4x points on hotels and airlines, Priority Pass lounge access, Global Entry/TSA PreCheck reimbursement.
Capital One Venture X ($395) → $300 travel credit, 10,000 bonus miles annually (~$100 value), 2x points on all purchases, Priority Pass lounge access.
Chase Sapphire Preferred ($95) → 2x points on travel and dining, strong sign-up bonus, travel insurance and protections.
The trick isn’t just looking at the fee, it’s comparing it to the value you’ll get from the perks and points.
The First-Year No-Brainer
Here’s a simple question to ask yourself:
Would you spend $95 to save $1,200?
Or $395 to save $1,150? Or $795 to save $1,500? Or $895 to save $2,000+?
That’s basically what the first-year sign-up bonus does. Let’s break it down:
Chase Sapphire Preferred ($95 annual fee)
Typical sign-up bonus: 60,000 points → worth at least $750 in travel.
Math: $95 fee vs. ~$750 travel credit → essentially free and then some.
Capital One Venture X ($395 annual fee)
Typical sign-up bonus: 75,000–80,000 miles → worth at least $750 in travel.
$300 travel credit + 10,000 bonus miles annually (~$100 value) → your fee can be mostly or fully offset each year, even without the sign up bonus.
Chase Sapphire Reserve ($795 annual fee)
Typical sign-up bonus: 100,000 points → $1500 in travel.
$300 travel credit + lounge access + free credits with StubHub, the Edit, etc → your fee can be covered in perks alone.
Amex Platinum ($895 annual fee)
Typical sign-up bonus: 100,000 points → $1,500+ value depending on redemptions.
Airline fee credit, Saks credit, $200 Fine Hotel and Resorts credit, lounge access → fee often more than offset in year one.
💡 Key takeaway: The first year is almost always a no-brainer if you’re earning the bonus. The points alone usually exceed the fee, and the perks add extra value.
After the First Year
After the first year, you need to evaluate whether the card’s ongoing perks outweigh the fee.
Ask yourself:
Will I use the travel credits? ($300–$200 airline credits, $100 Saks, $100 Uber, etc.)
Do I travel often enough to make lounge access or elite status worthwhile?
Am I maximizing bonus categories for points on dining, travel, or other spending?
If the answer is yes → the fee continues to be worth it.
If not → it might make sense to downgrade to a lower-fee card or switch to a no-fee alternative while keeping points.
Beginner-Friendly Examples
Here’s how it looks in action for a few popular cards, with clear explanations of the perks, credits, and points value.
Chase Sapphire Preferred ($95)
Annual fee: $95
Perks that offset the fee:
$50 Annual Chase Travel℠ Hotel Credit — each account anniversary year on hotel stays booked through Chase Travel.
$120 DoorDash Credit — $10 per month, automatically applied to DashPass or restaurant orders.
10% Anniversary Points Bonus — earn bonus points equal to 10% of last year’s purchases on your account anniversary.
First-year value (overview): The welcome bonus typically more than covers the fee on its own; with the $50 hotel credit and $120 DoorDash credit, your effective cost can be as low as $95 – $170 = negative, meaning you’re already coming out ahead before even using points.
Beginner takeaway: A low-fee starter card where the combination of hotel and DoorDash credits plus the bonus points make it an easy first step into travel hacking.
Capital One Venture X ($395)
Annual fee: $395
Perks that offset the fees:
$300 annual travel credit (applies automatically to travel purchases such as flights or hotels booked with the card)
10,000 bonus miles each year (~$100 value)
Points earned: 75,000–80,000 points from the first-year sign-up bonus → worth ~$750–$800 in travel.
Effective first-year cost: $395 – $400 (credits + bonus miles value) → net gain.
Key takeaway for beginners: The Venture X is a mid-tier card that feels more luxurious, but the math works in your favor. You get a $300 travel credit that applies automatically, plus bonus miles that can cover flights or hotels. Essentially, you’re using a $395 card to save $1,150+ in travel.
Chase Sapphire Reserve ($795)
Annual fee: $795
Perks that offset the fee?
$300 Annual Travel Credit — automatically applies to travel purchases such as flights or hotel bookings.
$500 “The Edit” Hotel Credit — split into two $250 credits per year (must book and prepay a 2-night minimum at select Chase Travel “Edit” properties).
$300 Dining Credit — up to $150 every six months for dining at “Sapphire Reserve Exclusive Tables” through OpenTable (auto apply).
$300 Entertainment Ticket Credit — applies to StubHub or viagogo ticket purchases ($150 per half-year, activation required).
DoorDash Credit — monthly promotional credits adding up to $300 per year (includes $5 off restaurant orders plus 2× $10 off non-restaurant items).
Apple TV+ / Apple Music Credit — up to $250 in subscription value per year (activation required).
Peloton Credit — up to $120 annually ($10/month).
Global Entry / TSA PreCheck Credit — up to $120 every four years for application reimbursement.
Priority Pass & Sapphire Lounges — airport lounge access and guest privileges continue.
First-Year Value Estimate (Beginner Mode):
Total credits can easily reach $2,000+ if you actively use them.
Welcome bonus: up to 125,000 points (depending on offer), which can be worth $1,500–$2,500 in travel
Effective First-Year Cost:
Suppose you use ~$2,000 in statement credits plus convert your bonus points to $1,600 in travel—your effective cost turns negative. You’re coming out ahead.
Beginner Takeaway:
Even with a $795 annual fee, the value here is extreme—assuming you're enabled to use multiple credits, you’re potentially saving thousands in travel and perks. The math still works as a massive win in year one.
American Express Platinum Card ($895)
Annual Fee: $895
Perks That Offset the Fee:
$200 Airline Fee Credit: Annually, you can receive up to $200 in statement credits for incidental fees like checked baggage or seat upgrades with a selected airline.
$100 Saks Fifth Avenue Credit: Split into two $50 credits, one in the first half of the year and one in the second half, usable for purchases at Saks Fifth Avenue.
$200 Uber Cash Credit: Monthly $15 credits for Uber rides and Uber Eats orders, plus an additional $20 in December, totaling $200 annually.
$240 Digital Entertainment Credit: Up to $20 monthly in statement credits for subscriptions to services like Disney+, Hulu, Peacock, etc.
$200 Hotel Credit: On prepaid bookings of two or more nights through American Express Travel at Fine Hotels + Resorts or The Hotel Collection properties.
$189 CLEAR® Plus Credit: Reimbursement for the application fee for CLEAR® Plus membership, which expedites identity verification at airports and stadiums.
$100 Global Entry or TSA PreCheck Credit: Every four years, receive a statement credit for the application fee for Global Entry or TSA PreCheck.
Priority Pass™ Select Membership: Access to over 1,300 airport lounges worldwide.
Marriott Bonvoy Gold Elite Status: Complimentary status offering perks like room upgrades and late checkout at participating Marriott hotels.
Hilton Honors Gold Status: Complimentary status providing benefits such as room upgrades and daily breakfast at participating Hilton properties.
5X Membership Rewards® Points: Earn 5 points per dollar on flights booked directly with airlines or on amextravel.com, and on prepaid hotels booked on amextravel.com.
First-Year Value Estimate:
Total Credits: Up to $1,929
Welcome Bonus: 100,000 Membership Rewards® Points, potentially worth $1,500 or more when redeemed for travel.
Effective First-Year Cost: $895 annual fee – $1,929 in credits = -$1,034 (net gain)
Key Takeaway for Beginners: The American Express Platinum Card offers a wealth of benefits that, if utilized effectively, can more than offset its annual fee. The combination of travel credits, statement credits, and the welcome bonus can result in significant value, making it a compelling choice for frequent travelers who can take full advantage of its offerings.
Simplifying Credit Card Perks
For beginners, think of the credit card perks as free money the card gives you each year. These are the perks that automatically offset your annual fee, such as:
Travel credits (flights, hotels, Uber, Lyft)
Statement credits (shopping, dining, airline fees)
TSA PreCheck or Global Entry reimbursements
By subtracting these credits from the annual fee, you can see your effective cost — and compare it to the value of points earned. That’s the magic formula that shows you if the card is worth it.
How to Decide If an Annual Fee Is Worth It for You
Here’s a simple formula to evaluate:
Add up all credits you’ll realistically use.
Estimate the cash value of your points (1–2 cents per point is a safe beginner baseline).
Subtract credits + points value from the annual fee.
Ask yourself: “Would I spend X dollars to save Y dollars?”
If the answer is yes → keep the card.
If no → downgrade or switch to a lower-fee card.
Tips for Beginners
Start with lower-fee cards like Chase Sapphire Preferred ($95) or Venture X ($395) if you’re unsure.
Use all your credits — airline credits, hotel/travel credits, Uber, Saks, Global Entry, TSA PreCheck — these are free money.
Track perks carefully — put them in your calendar or a reminder app so nothing expires.
Think long-term — some perks (like lounge access) only make sense if you travel frequently, but points accumulation always adds value.
Key Takeaways
The first-year bonus almost always covers the fee. Even high-end cards like Amex Platinum or Chase Sapphire Reserve are worth it if you claim the sign-up bonus and use credits.
Subsequent years depend on your usage. If you regularly use credits and perks, the fee can still be worth it. If not, downgrade or switch to a lower-fee card.
Points + perks > annual fee is the simple math every beginner should understand.
Would you spend $395 to save $1,150? Or $95 to save $750? That’s exactly the kind of math travel hackers live by.
Ready to Start Your Points Journey?
If you’re still unsure about which cards to pick, or how to maximize the value of sign-up bonuses and credits, my Free Beginner’s Guide to Points and Miles walks you step-by-step through the process.
Get it today, and start planning your first trips the smart way — without leaving money on the table.