Is Your Credit Card Annual Fee Worth It?

The Annual Fee Question

Every year, millions of credit cardholders face the same question: is my annual fee worth it? With premium cards charging $95 to $695+ per year, making the wrong decision can cost you hundreds of dollars—either by paying for benefits you don't use or canceling a card that was actually providing value.

This guide shows you exactly how to calculate your card's ROI.

The ROI Formula

Credit card ROI is straightforward:

For example, if you get $600 in value from a card with a $550 annual fee:

ROI = ($600 - $550) / $550 × 100 = 9%

A positive ROI means the card is worth keeping. But aim for at least 25-50% ROI to account for the effort of tracking benefits and the opportunity cost of that annual fee.

Step 1: List All Card Benefits

Start by listing every benefit your card offers. Common categories include:

Statement Credits

• Travel credits (airline, hotel, rideshare)
• Dining credits
• Streaming/entertainment credits
• Shopping credits (Saks, Walmart+, etc.)
• Fitness credits (Equinox, Peloton)

Travel Benefits

• Airport lounge access
• Hotel elite status
• Car rental status
• Global Entry/TSA PreCheck credit

Insurance & Protections

• Trip cancellation/delay insurance
• Car rental insurance (primary vs. secondary)
• Cell phone protection
• Purchase protection
• Extended warranty

Points/Miles Value

• Bonus earning rates above a no-fee card
• Transfer partner access
• Anniversary bonuses

Step 2: Calculate What You Actually Use

Only count benefits you actually use. This is where most people go wrong—they count the theoretical value of all benefits, not what they redeem.

Credits: Count What You Redeem

If your card has $200 in annual dining credits but you only use $120, count $120. Be honest about monthly credits you miss.

Lounge Access: Count Actual Visits

Value each lounge visit at $30-50 depending on quality. If you visited 8 lounges last year, that's $240-400 in value. Don't count potential visits.

Hotel Status: Count Actual Upgrades

Elite status is only valuable if you get upgrades and use the perks. If you stayed at 5 hotels and got upgraded twice, value the upgrades specifically—not the theoretical value of Gold status.

Insurance: Value Based on Peace of Mind

Insurance is tricky to value since you hope never to use it. A reasonable approach: value primary car rental insurance at $15-20/day for each rental day, trip delay insurance at $50-100 if you travel frequently.

Points: Calculate Incremental Value

Compare your earning rate to a no-annual-fee card (typically 1-2%). If you spent $30,000 on dining at 4x vs. 1x on a free card, the incremental value is 3x × $30,000 × $0.01 = $900 in extra points (at 1 cent per point).

Step 3: Build Your Calculation

Here's a real example for the Amex Platinum ($895/year):

ROI = ($1,470 - $895) / $895 × 100 = 64%

This card is clearly worth keeping with a 64% ROI.

Step 4: Make Your Decision

Keep the Card If:

• Your ROI is positive (you're getting more value than the fee)
• You're using benefits that would be expensive to replace (lounge access, insurance)
• Your spending patterns match the card's bonus categories
• You'd lose valuable transfer partners by canceling

Consider Downgrading If:

• Your ROI is slightly negative but you want to keep the account open
• There's a no-fee version of the card available
• You have points that would be forfeited by canceling
• The account age is helping your credit score

Cancel If:

• Your ROI is significantly negative
• No downgrade option exists
• You don't have points to preserve
• You've already tried for a retention offer

Before You Cancel: Ask for a Retention Offer

Before canceling any premium card, call and ask for a retention offer. Many issuers will offer statement credits or bonus points to keep you as a customer.

How to Request a Retention Offer:

1. Call the number on the back of your card
2. Say: "I'm considering canceling my card due to the annual fee"
3. Ask: "Are there any offers available to help offset the annual fee?"
4. If the first rep says no, politely ask to speak with a retention specialist
5. Be prepared to explain your spending and that you have other card options

Common Retention Offers:

• Amex: $150-300 statement credit or 20,000-40,000 points
• Chase: $100-150 statement credit or 5,000-10,000 points
• Citi: $95-150 statement credit

Retention offers vary based on your spending history and are not guaranteed. If you receive an offer, factor it into your ROI calculation for the next year.

Common ROI Calculation Mistakes

• Counting benefits you don't use: That $300 Equinox credit is worth $0 if you don't have an Equinox membership
• Forgetting monthly credit resets: Missing just one month of a $15 credit costs you $180/year
• Overvaluing lounge access: If you only fly 2x/year, lounge access adds minimal value
• Ignoring opportunity cost: That $695 annual fee could earn 4-5% in a savings account
• Not considering alternatives: Compare to what a no-fee card would provide

Automate Your Benefit Tracking

Manually tracking credits across multiple cards is tedious and error-prone. That's why we built kardfolio—to automatically track your benefit usage, alert you before credits expire, and calculate your ROI.