Why You're Valuing Your Credit Card Perks Wrong

Credit card perks are great -- unless they aren't.

No matter how much you love your credit cards (and some of us really do), there's one thing we all hate: annual fees. And these days, it often seems like credit card annual fees are getting higher every day. Cards that were $400 a year not that long ago now cost $550 and more -- way more.

In theory, all those fees are repaid through credit card rewards and perks. In reality, those perks are only as valuable as you make them.

When you're forking over hundreds a year just for the privilege of using your fancy rewards card, it's important to know you're getting your money's worth. Unfortunately, many of us may be overvaluing our credit card perks, a mistake that could cost a fortune in fees.

You're probably not using them all

One major way many folks overvalue their credit card perks is by assuming they'll use them to the fullest every year. For instance, say your card offers you $20 a month in Uber credits. Sounds great, right? Sure -- if you use Uber. On the other hand, if you live in the suburbs and drive everywhere, you may not be maxing out that annual credit after all.

Even a broader credit, like a general travel credit, may be hard to maximize each year if you're not traveling regularly. Unless you know you're going to travel at least once or twice each year, that travel credit could wind up wasted.

Of course, it's more than just statement credits. That fancy travel rewards card may come with elite hotel status, but if you're only staying with that hotel brand once a year, are you really getting your annual fee's worth of value from that elite status?

Oh, and let's not forget that TSA PreCheck credit that most travel cards offer. Most folks don't actually travel enough to make the hassle of getting PreCheck approval worthwhile. Even if you do get PreCheck, if you have more than one credit card that offers a credit for it, you can't double up, meaning the rest of your credits will go to waste.

When you're evaluating your credit cards each year, make sure you're being realistic about how many of your card's perks you actually use. If you aren't going to use a perk, don't count it toward the card's value when deciding if it's worth its annual fee.

You're spending extra money

Another thing to consider when looking at your card's perks is not just whether you're using your credits, but how you're using them. Unless you were going to make those purchases already, then using up your card's credits could be costing you money you wouldn't have otherwise spent.

Let's go back to the example of the Uber credit. If you don't use rideshares often, you may prefer to use up your monthly credit with an UberEats delivery. However, the cost of your order is very likely to exceed the credit you'll get from your credit card. So, if you wouldn't normally order UberEats, you're actually losing money by using your credits.

And the same thing goes for other types of card perks. A $300 annual travel credit sounds great, right? Who doesn't want $300 in free travel? But if you weren't going to travel without that credit, you aren't actually coming out ahead. Instead, your annual fee is essentially just prepaying for unwanted travel.

Waste not, value not

The only way credit card perks are valuable is if they add value to your list -- not diminish it.

When it comes time to decide whether your expensive rewards credit card is holding up its end of the deal, it pays to be brutally honest about its true value. Are you using the perks just to use them or because you get real value from them?

If you find that you're going out of your way (or out of your pocket) just to use your credit card perks, then those perks may not actually be valuable for you. Instead, consider finding a new credit card with perks that better match your spending habits and lifestyle.