Some credit cards charge an annual fee and provide more generous rewards. Are these cards worth their annual fee? To find out, let’s compare the no-fee American Express AIR MILES credit card with the Gold card that carries a $50 annual fee. One AIR MILE is worth about 13.5¢, so the Gold card earns more rewards than the no-fee version only when more than $22,200 is spent.

Similarly, the popular CIBC Aerogold VISA card charges a $120 annual fee and earns one Aeroplan Mile for every dollar of spending. Since an Aeroplan Mile is worth about 0.83¢, a spending of $14,500 on the card just earns back the annual fee. Credit cards that charge an annual fee might be attractive for features like a lower interest rate, but are not worth the slightly better rewards in most instances.