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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.
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3 responses so far ↓
1 FMF // Feb 22, 2006 at 7:41 am
I agree. I prefer a no fee cared that gives me money back — then I can spend it however I like.
2 Alex Givant // Feb 22, 2006 at 7:59 am
It’s always worth to ask if they can waive these fees (if you a good customer and have lot of business with the bank). Maximum, they can say you “No”.
3 Money Blog Network // Feb 26, 2006 at 6:29 pm
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