Home Credit Annual Fee on Travel Credit Cards – Is It Worth It?

Annual Fee on Travel Credit Cards – Is It Worth It?


Annual fee on your travel credit card can set you back by several hundred dollars a year. How do you know if you are getting your money’s worth? By just following three easy steps you’ll be able to tell whether or not your travel credit card is worth having. Step 1: Calculate value of travel points that you’d potentially earn in a year. Travel credit cards usually give you a set number of points for each dollar spent and this can range from 1 point per dollar to 5 points per dollar.

For our example we’ll assume the credit card we have gives us 2 points for every dollar spent and we spend $1,000 per month on this card. That means we earn 2,000 travel points in a month or 24,000 travel points in a year. Next we need to figure out how much these points will save us when we go to book travel. Most credit cards have a set conversion rate for points to dollars which you can find out on their website. For our example, we’ll assume every hundred points save us $1.00 so our 24,000 points will give us a total saving of $240 when booking travel. Step 2: Calculate the value of perks being offered by your credit card. Perks include things like roadside assistance, travel medical insurance, airport lounge access, and so on.

For our example we’ll assume we use lounge access twice a year when on a holiday and each visit would have cost us $50 if our credit card didn’t offer this as a perk. Hence, the total value of perks is $100 in our example. Step 3: Add the value of rewards and perks then subtract the annual fee. In our example our total travel reward was worth $240 and our lounge access was worth $100. Add these two numbers together and that gives us a total value of $340 in rewards and perks. Next we’re going to subtract the annual fee which we will assume is $100. By subtracting the annual fee of $100 from the value of rewards and perks which was $340 we are left with a net gain of $240. At the end of this exercise if you end up with a net gain like in our example then the credit card is worth having.

If you have a net loss then you are losing money and are probably better off without it. If you liked this video and found it useful make sure to like, subscribe, share, and hit the bell icon so you don’t miss any future videos. Also, leave a comment below let us know what topics you’d like to be covered in the future.


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