When Is It Worthwhile to Pay Your Credit Card’s Annual Fee?

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Annual fees on credit cards are really annoying. It’s one of those things you know you can get away with, especially if you’ve been using your credit card and paying your bills on time. Yet at the same time, banks religiously charge you a hefty annual fee in the hopes that you won’t check your statement.

Thankfully, most of us probably would be able to get an annual fee waiver if we request for it. And if not, it’s not too difficult to cancel a credit card right away. Unless of course, you have instalment payments charged to your card.

But there are some instances when you can consider paying the annual fee. It might even be worthwhile doing so.

Really? When would that be?

The few cases when annual fees make sense

1. When there are renewal bonuses being offered

Don’t be fooled into thinking that you should be paying the annual fee for the day-to-day rewards that your credit card gives you. Or that you need to pay for the administrative costs and convenience of using a credit card.

You should only consider paying the annual fee if the bank offers renewal bonuses. In Singapore, this usually comes in a form of air miles. We haven’t seen instances of reward points being offered, probably because the value of reward points is not very high.

Here are some of the credit cards come with renewal bonuses:

Card

Annual FeeRenewal Bonus

What that’s like

DBS Altitude VISA Signature Credit CardS$192.6010,000 miles51.9 miles / dollar or 1.9 cents / mile
DBS Altitude American Express Credit CardS$192.6010,000 miles51.9 miles / dollar or 1.9 cents / mile
Citi PremierMiles Visa CardS$192.6010,000 miles51.9 miles / dollar or 1.9 cents / mile
ANZ Travel Visa Signature Credit CardS$200.0010,000 miles50 miles / dollar or 2 cents / mile

The travel cards above generally offer you up to 3 miles per dollar and in the case of Citi PremierMiles, up to 10 miles per dollar. That’s far cry from the 50 miles you can earn per dollar when you pay the annual fee.

If you were to consider the cost per mile, you’ll also realise that 2 cents per mile is not a bad deal. You’re likely to get a higher value from your miles redemptions even on economy flights, and almost certainly on business class or first class flights.

2. When there are extra benefits only if you pay the annual fee

Not all of us enjoy playing the miles game. Well for those of us, there are other cards that offer other incentives in exchange for the annual fee.

The American Express Platinum Credit Card is one such card. The first year annual fee is waived, so you get to enjoy all the dining privileges under the Love Dining programme, and the Far Card. The dining programme entitles you to up to 50% off some of Singapore’s finest restaurants in hotels and beyond. If you’re a foodie and can afford these experiences, you’ll find making back your annual fee a breeze.

When you first sign up for the American Express Platinum Credit Card, you’ll also get a set of vouchers to get discounted room rates at the Swissotel and Fairmont, complimentary room upgrades, as well as more 50% off dining vouchers. These vouchers won’t be sent to you again if you choose not to pay the S$321 annual fee after the first year.

Another card from American Express that used to have an attractive renewal voucher is the Singapore Airlines KrisFlyer Ascend Card. If you pay the annual fee after the first year, you’ll receive a complimentary night’s stay with Millennium Hotels and Resorts.

This is not that attractive anymore, because the annual fee is now S$337.05, and that’s more than what you’ll pay at most of the eligible Millennium Hotel properties around the world. Now, the card may still suit your needs, but I’d recommend to try and get an annual fee waiver if possible.

3. When there are amazing welcome gifts

The last scenario is when there are great sign-up gifts available only when you pay the annual fee. Here are a few:

 

Card

Annual FeeWelcome Gift

What that’s like

HSBC Visa Infinite Credit CardS$65035,000 miles53.8 miles / dollar or 1.8 cents / mile
Standard Chartered Visa Infinite Credit CardS$588.5035,000 miles59.4 miles / dollar or 1.6 cents / mile
American Express Platinum Credit CardS$32132” LED TV + B&O Earphones + Samsonite LuggageLots of new gadgets if you manage to meet the minimum spends

If you’re already planning to get the HSBC or Standard Chartered card, at least they have made it worth the annual fee by offering you lots of miles.

As for the American Express Platinum Credit Card, make sure you check out how much each of these gifts is retailing for in the stores, before deciding on paying the annual fee. You’ll need to spend S$7,500 in the first 6 months to get all 3 items.

To summarise, annual fees shouldn’t be paid unless you’re getting bonus miles or other benefits that are worth more than what you have to pay. These days, getting an annual fee waiver is simple. Just call up the bank and let them know that you would like a waiver. For some banks, you don’t even have to speak to a customer service officer!

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