I Spend $1,600 a Year on Credit Card Annual Fees. Here's Why It's Worth It

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  • Rewards credit cards with low annual fees can pay for themselves if you maximize your earnings.
  • High-fee travel rewards cards have annual credits that can easily make them worth the cost.
  • Cardholder perks, like lounge access, can be great boosts to a card's overall value.

With great fees come great benefits.

Over the years, maximizing my credit card rewards has become one of my favorite hobbies. In fact, it's right up there with binge-watching British cooking competitions. 

A big part of that hobby has been tweaking my credit card lineup to make sure I'm maximizing every purchase, every time. This obsession with making the most of my cards -- and my card spending -- means I've accumulated a lot of cards. Like, I have multiple wallets to fit them all a lot.

While more than half the cards in my collection are no annual fee cards, the other half -- aren't. And those annual fees add up. In my case, they add up to the tune of around $1,600 a year. That's right, I pay $1,600 a year just in credit card annual fees. 

If that number makes you wince, you're not alone. But, hear me out. While I may have to fork over a pretty big chunk of change on fees each year, I don't actually lose that money. 

Confused? Let me clarify. Every credit card I own gives me rewards, credits, and perks that provide a value greater than the annual fee. That means I actually come out ahead in value each year. Here's how it works.

The rewards

The first way I get value from my credit cards is through purchase rewards. Every single card I own is a rewards credit card. Some are cash back cards, others earn points in a few transferable currencies. I even have a handful of co-branded cards that earn airline miles or hotel rewards. 

While the currencies differ, they all have one thing in common: Each card in the collection is the best card, rewards-wise, for at least one of the things I purchase regularly. 

For example, one card is the best for groceries, offering 4X points per dollar. Another card gives me 5X points per dollar on flights and airline purchases. I even have a card giving me 6% cash back on streaming services

Do you need to pay annual fees to maximize your rewards? Not necessarily. It's perfectly possible to have a very solid rewards strategy made up entirely of no annual fee credit cards. 

But when you want the highest rewards rates possible, you're going to be paying annual fees. And for me, it works out. Several of my cards make up their entire annual fee -- and then some -- in rewards alone.

The credits

While rewards can offer a ton of value, some cards are never going to be worth their fees in rewards alone. This is especially true of travel rewards cards with $400+ annual fees. 

But what these pricey cards do have are often even more valuable than rewards: credits. 

Rewards card credits come in a variety of shapes and sizes. Hotel credit cards, for instance, often offer annual free night awards. These are essentially like digital vouchers you can redeem for free hotel stays. I've easily gotten $300+ in value for a single free night award from a credit card with an annual fee of just $95.

Other cards offer statement credits. These credits operate similar to rebates. When you make a qualifying purchase, you get a statement credit for a certain amount. For example, one of my card's gives me $10 a month in credit when I make purchases with eligible restaurant brands.

Making full use of these credits goes a long way to getting value out of expensive cards. With most of these cards, I earn more in credits than I spend on fees. The trick is to make sure the credits align with the spending you already do; don't make purchases you wouldn't normally make just for the statement credits.

The perks

Another way I get extra value from my pricier credit cards is through the perks. These are little extras that come with the card outside the rewards and credits. 

One of my favorite perks is airport lounge access. I get unlimited visits to thousands of airport lounges at airports around the world, often with the option to bring in guests for free. Airport lounges are not only a great place to spend some quiet(er) time before a flight, but they also tend to offer free food and drinks. 

I also love my hotel status perks. I have a few credit cards that offer elite status with popular hotel brands, like Hilton and Marriott. This elevated status has netted me everything from room upgrades to free breakfast.

Depending on how often you travel, perks like those above can be worth a big annual fee nearly on their own. When paired with rewards and credits, however, they're the valuable icing on an already lucrative cake.

Regular card audits are key

At this point, you can probably see why I've elevated my credit card obsession to the hobby level. It takes a certain amount of time and energy to keep track of it all. This includes a spreadsheet that I update every couple weeks.

It also includes my annual card audits. Once a year -- typically before the annual fee posts again -- I evaluate each card in my collection to ensure it's still pulling its weight. I crunch all the numbers for the rewards, credits, and perks and compare it to any card fees. If my spending habits have changed and the card isn't holding its own, it gets canceled.

So, that's how I justify spending $1,600 a year in credit card fees. By my estimation, I get back at least double that in benefits every year, and I have very healthy rewards balances ready to put toward even more valuable trips in the future.

Maximizing rewards, tracking credits, and juggling perks isn't for everyone. It is definitely work. But if you do it right, it can be a fun hobby that pays for itself!

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