Credit card annual fees (AF) keep going up. A lot of people thought that American Express set the ceiling at $695 with their Platinum cards. In June of 2025, Chase announced a complete revamp of the Chase Sapphire Reserve (CSR) with a new AF of $795. Apparently there is no ceiling because most people expect there to be a card with higher AF at some point. These high AFs scare away some people because they just see the big number. That’s the wrong way to go about it because those numbers are not really accurate for most people.
Unfortunately, a lot of these credit cards are turning into coupon books to justify these high fees. They’ll say that you’re getting way more in free stuff so you’re actually coming out ahead despite the high AF. For the vast majority of people, that is also the wrong way to look at it. You should know that nothing with travel hacking is ever that easy. This course will explain how you should approach the question of whether or not an AF is worth it.
The analysis is going to be different from the first year to the second year so we’ll discuss each separately.
First year
The AF for the first year will almost always make sense. Let’s stick with the new CSR. For this analysis, I suggest keeping it very simple. At the time of publication, the SUB is as follows: For $795, you get 100,000 URs plus a $500 Chase Travel promo credit for spending $5000 in the first 3 months. The $500 Chase Travel promo doesn’t even really factor into this analysis because I’m going to keep this very easy. The other problem is that you are not going to know if you’ll use it or if you’ll use all of it. Its always important to check the terms and conditions as “the promotional credit is valid for a one-time use only, if you apply the promotional credit to a transaction less than $500, you will forfeit the remaining balance.”. So you’ll have to spend either exactly $500 or more than that to get full value. I think a lot of people are going to miss that.
The easiest benefit to use is the $300 travel credit which is automatically applied to your statement when you book anything that is coded as travel. Almost everyone that would get this card is surely going to spend money on plane tickets and hotels and there are no hoops to jump through. That really brings the AF down to $495. While there are other benefits we could discuss, let’s just assume that you’re not going to use any of them.
So The question is, should you apply for a card that has a net AF of $495 to get 100,000 URs? First lets value those URs. Since they are worth 2cpp, they are worth $2000. Would you spend $495 to get $2000 worth of free travel? The answer should be yes. We could argue that the SUB should be higher given the AF but it is what it is. This is one of the highest SUBs that Chase is offering right now across their cards.
While we always want you to run some very basic math like this, we’re going to give you a little bit of a spoiler here. For the first year, the big SUB will almost always make sense regardless of what the AF is. Otherwise, having a SUB would be pointless. The SUB is the carrot to get you to apply for the card. The other benefits are there to make sure you keep it.
Why keep it simple?
We see a lot of people saying “I’ll never use all of these benefits” or “I’ll get thousands of dollars in benefits out of this card”. That’s a lot of speculation and its really not that necessary for most people since the points you’ll get will likely justify just about any AF. The only time you have to do this analysis is when you are deciding between the CSP and CSR. That’s a big decision but I’m not aware of any other cards that require you to decide that. There are of course other cards that come in different varieties. United for example has several credit cards. While you can get them all, you may just want one. In that scenario, it’ll make sense to do some more analysis. But that probably doesn’t apply to a lot of people. The last section of this course will help you with this analysis.
The next question
It would be great if you could just apply for an infinite amount of cards but the next question is should you apply for this card given the applicable card rules and other alternatives. We’ll stick with our Chase example. Instead of the CSR, you could apply for the Chase Sapphire Preferred. At this moment, the SUB is 75,000 URs after spending $5,000 after 3 months. The AF is only $95. To put this in dollar terms, you’ll spend $1,500 in points for the same amount of spend with just a $95 AF. It’s a much better return and easier to deal with. You just have to decide which one makes sense because you can’t have both.
Related to that, there are rules you should be aware of, some of which have already been discussed elsewhere. As we just mentioned, you cannot have both Sapphires so you have to determine which one you want. Another rule is Chase’s 5/24 rule. Normally you’d want to consider if a card is worth that coveted 5/24 slot but since a Sapphire is needed to transfer your points, the only question is which Sapphire you’ll get. So just because a card might be worth it, that doesn’t mean that it is the right card, right now. If you’re not sure, ask in our Facebook group.
Is the annual fee worth it after the first year?
This is where things get more involved. The good news though is that by this point you’ll have a full year of using the card. You’ll know what you’ve used and what you haven’t used. There’s no need to really speculate. However, that doesn’t mean that you can just add up all of the money that you saved and see if it outweighs the AF. A lot of people try to justify a high AF by pointing to all of the credits that they’ve used. While that may make sense for some people, it’s not our recommendation. Let’s break it down.
For this example, we’ll use the Dell credits that come with the Amex Business Platinum. Right now it is $150 every 6 months. A lot of people buy things on Dell and call it a win. Another way to look at this is: were you going to buy that stuff anyway? Because if you weren’t, is this really a win? Obviously, this is going to be subjective but getting something for free that you weren’t really going to get in our opinion should not be used as a dollar-for-dollar offset of the AF. We use our Dell credits to buy things and then sell them on eBay. We are not going to get full price. So $150 might only be $100 by the time you’re done with everything.
It really doesn’t matter what the credit is. A proper analysis should be whether or not the card benefits are really offsetting the AF and not whether or not you are finding things to use. Again, this is just our opinion. If you are buying random things on Dell and that makes you happy, great. If its free great, but what about when people have to pay to take advantage of their credits?
Going back to the new CSR, one credit that will require you to spend money is the twice per year, $250 credit for The Edit. These are very expensive hotels that require at least a two night stay. In other words, you’ll be paying more than $250 to stay there. So if the stay is $1,000 for two nights, you are getting $250. Although it also comes with various perks, you still spent $750. Were you really going to do that anyway? Surely someone will say yes but for 99% of you, probably not. Thus, this type of perk, regardless of whether you take advantage of it, is basically worthless for most people.
Another possible example is the twice per year $150 Stub Hub credit. We would normally not use Stub Hub as we don’t usually go to live events these days. We’d probably take advantage of this anyway. However, what are the chances that we find something we want to do that costs exactly or less than $150 for the two of us? Chances are we’ll pay more. So for us, this benefit has no real dollar value. Of course if you buy a lot of stuff on Sub Hub anyway, this probably has full value for you. In other words, two different people can use the same credit but get completely different value out of it.
Of course, not everything has a set dollar amount. Some benefits require you to place a dollar amount on the benefit. Once again the CSR is a great example. We’ve already discussed that you should consider the net AF is $495 before you look at anything else. Let’s assume that you went through all of the other credits and after a year of using the card, you’ve determined that you’re getting $300 in real value out of those credits. That brings the net AF down to $195. Since you need a Sapphire, does it make sense to downgrade to a CSP for $95? In other words, does it make sense to keep this card for an extra $100?
One of the best benefits of the CSR is the lounge access. Not only do you have priority pass with guest access (for now) but you’ll also have access to the Chase lounges. While these lounges aren’t everywhere, Chase has been pretty good at filling in the gaps in airports like PHL and PHX where there was little to no priority pass lounges. So for the vast majority of people, they’ll be able to use these lounges a few times a year. Is that worth $100? For us the question is a definte yes. While there is no lounge at our home airport, we’ve used priority pass lounges across the world. Some are great, some are OK and some are awful. Often times we can eat an whole meal at the lounge while other times we are just getting a free drink. Just from a food perspective, this saves us a lot of money. Having a comfortable place to hang out (usually) away from the terminal is also nice as well.
To recap, there’s two points we really want you to consider here. First, is this credit really saving you money? Getting stuff for free is great but can you really consider the credit as offsetting the AF if you weren’t going to buy that item/service in the first place? Our opinion is no but you may have a different opinion. If you do, great. What matter is not whether you agree with us but whether you’ve actually done the analysis. Our problem is that some people just say, $2000 worth of free stuff is great than the $795 annual fee so it makes sense. We just don’t think that’s the way to do it but again, if you disagree, that’s fine too.
The second question point is whether you’ve placed a value on other benefits like lounge access that don’t have a dollar amount attached to them. This will differ from person to person. Some people love lounge access while others could care less or don’t use it much. Since this is more difficult to value, we suggest first adding up all of the credits that are saving you money and then looking at the remainder to determine if that benefit is worth more than that.
How to analyze retention offers
Some credit card companies will offer you a retention offer if you keep the card when the new AF is due. In other words, when you’re AF hits, call up the card company and tell them that you’re thinking about cancelling the card. What are the options? Are there any retention offers? This will vary from person to person. Amex isn’t the only company that does this but they are probably the most famous for them. One of our Amex Business Gold cards had a 35,000 point retention offer for $3000 in spend. For us that was worth the AF.
Regardless of the rention offer, the best way to approach this is that this is a new SUB but without the application. Thus you’ll want to do the same analysis but now you have a year of using the card to see if its worth it. Let’s go back to our Amex Business Gold card. The AF is $375. However, we get $20 per month in free Amazon GCs are office supply stores. Everyone uses Amazon so at $240 a year, the net AF is $135. It comes with Walmart+ for free which we do get some value from. That would take a lot of math to determine the value but lets just assume its $35 a year. That leave us with $100. Is it worth $100 to get an extra 35,000 MRs? You bet! Those are worth around $700. Would I keep the card without a retention offer? Probably not.
What about higher multipliers?
One thing we didn’t discuss was higher multipliers. Keeping with the “simple” theme of this website’s URL, we can’t possibly get into every last aspect of a topic. But for purposes of completeness, a brief mention of this is warranted. If you have high spend in one category and this one card will give you a higher multiplier than any other card you have than this feature might have some extra value to you. Let’s go through an example.
Assume you spend $5,000 on gas a year due to your commute which is way above the average of what most people spend. The best card you have gets 1.5x. However, you have a card with a high AF that gets 4x. Assume both points are worth 2cpp. This card with a high AF is getting you an extra 2.5x. 5000 x 2.5 = 12,500 points x .02 (2cpp) = $250 in value. Of course, getting an extra $250 to justify an AF that is $250 doesn’t make much sense since you are breaking even. I would say you’d have to get double the value so let’s value this at $125. Let’s go back to our Amex Business Gold example. I said that we are leftover with $100 after everything is added up. Since $125 is greater than $100, we are coming out ahead with $125 to spare. If it was only $75, that would be less than $100 and probably not worth keeping the card.
Conclusion
I know this is a lot to consider and don’t worry if you didn’t grasp it all from the start. However, its important to not fall into the trap that the credit card companies are setting for you. They advertise a value that is 3, 4 or ever 5 times greater than their AF. However, they know that most people won’t be able to use all of that or they’ll forget about them. It’s also important to really consider whether the credits and benefits you are receiving are really offsetting the AF or if you’re just getting free stuff you didn’t really need in exchange for the AF.
If you have questions or want to discuss in more detail, join us in our Facebook group where no question is a bad question.