When is it Worthwhile to Pay Your Credit Card’s Annual Fee?

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Annual fees on credit cards are really annoying. It’s one of those things you know you can get away with, especially if you’ve been using your credit card and paying your bills on time. Yet at the same time, banks religiously charge you a hefty annual fee in the hopes that you won’t check your statement.

Thankfully, most of us probably would be able to get an annual fee waiver if we request for it. And if not, it’s not too difficult to cancel a credit card right away. Unless of course, you have instalment payments charged to your card.

But there are some instances when you can consider paying the annual fee. It might even be worthwhile doing so.

Really? When would that be?

The few cases when paying your credit card annual fee makes sense

1. When there are renewal bonuses being offered

Don’t be fooled into thinking that you should be paying the annual fee for the day-to-day rewards that your credit card gives you. Or that you need to pay for the administrative costs and convenience of using a credit card.

You should only consider paying the annual fee if the bank offers renewal bonuses. In Singapore, this usually comes in a form of air miles. We haven’t seen instances of reward points being offered, probably because the value of reward points is not very high.

Here are some of the credit cards that come with renewal bonuses:


Annual Fee Renewal Bonus

What that’s like

DBS Altitude VISA Signature Credit Card S$192.60 10,000 miles 51.9 miles / dollar or 1.9 cents / mile
DBS Altitude American Express Credit Card S$192.60 10,000 miles 51.9 miles / dollar or 1.9 cents / mile
Citi PremierMiles Visa Card S$192.60 10,000 miles 51.9 miles / dollar or 1.9 cents / mile

The travel cards above generally offer you up to 3 miles per dollar and in the case of Citi PremierMiles, up to 10 miles per dollar. That’s far cry from the 50 miles you can earn per dollar when you pay the annual fee.

If you were to consider the cost per mile, you’ll also realise that 1.9 cents per mile is not a bad deal. You’re likely to get a higher value from your miles redemptions even on economy flights, and almost certainly on business class or first class flights.

Related: Citi PremierMiles Credit Card Review: A Must-Have to Fuel Your Wanderlust

2. When there are extra benefits only if you pay the annual fee

Not all of us enjoy playing the miles game. Well for those of us, there are other cards that offer other incentives in exchange for the annual fee.

The American Express Platinum Credit Card:

The American Express Platinum Credit Card is one such card. The first year annual fee is waived, so you get to enjoy all the dining privileges under the Love Dining programme. The dining programme entitles you to up to 50% off some of Singapore’s finest restaurants in hotels and beyond. If you’re a foodie and can afford these experiences, you’ll find making back your annual fee a breeze.

When you first sign up for the American Express Platinum Credit Card, you’ll also get a set of vouchers to get discounted room rates at the Swissotel and Fairmont, complimentary room upgrades, as well as more 50% off dining vouchers. These vouchers won’t be sent to you again if you choose not to pay the S$321 annual fee after the first year.

American Express Singapore Airlines KrisFlyer Ascend Card:

Another card from American Express that used to have an attractive renewal voucher is the Singapore Airlines KrisFlyer Ascend Card. If you pay the annual fee after the first year, you’ll receive a complimentary night’s stay with Millennium Hotels and Resorts.

This is not particularly attractive since most of the eligible Millennium Hotel properties around the world cost less than S$337.05. Now, the card may still suit your needs, but I’d try and get an annual fee waiver if possible.

3. When there are amazing welcome gifts

The last scenario is when there are great sign-up gifts available only when you pay the annual fee. Here are a few:


Annual Fee Welcome Gift

What that’s like

HSBC Visa Infinite Credit Card S$650 35,000 miles 53.8 miles / dollar or 1.8 cents / mile
Standard Chartered Visa Infinite Credit Card S$588.50 35,000 miles 59.4 miles / dollar or 1.6 cents / mile
American Express Platinum Credit Card S$321 2D1N stay at Dorsett Singapore + B&O Earphones + Samsonite Luggage Lots of new gifts if you manage to meet the minimum spends

If you’re already planning to get the HSBC or Standard Chartered card, at least they have made it worth the annual fee by offering you lots of miles.

As for the Amex Platinum Card, find out the real price of these gifts, and if you’ll even need them. It may not be worth as much as is advertised. Together with the annual fee, you’ll need to spend S$7,500 in the first 6 months to get all 3 items.

Related: How to Save Money on Electronics and Gadgets in Singapore

So, don’t pay your annual fee for nothing

To summarise, annual fees shouldn’t be paid for nothing. Make sure that you’re getting bonus miles or other benefits that are worth more than what you have to pay. These days, getting an annual fee waiver is simple. Just call up the bank and let them know that you would like a waiver. For some banks, you don’t even have to speak to a customer service officer!

Related: [Infographic] Ultimate Guide to Choosing a Credit Card


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