When Is It Worth Paying an Annual Fee on a Credit Card?

Many Canadians shy away from credit cards with annual fees—and that’s fair. Why pay to use a card when there are free options out there?

But here’s the truth: sometimes, paying an annual fee is worth it. In fact, it can save or earn you more money than a no-fee card ever could.

Let’s break down when it makes sense to pay an annual fee on a credit card—and when it doesn’t.

When It Is Worth Paying an Annual Fee

1. The Rewards Outweigh the Cost

This is the easiest test. If the rewards you earn exceed the annual fee, you’re winning.

Example:

• You pay $120/year for a travel card

• You earn $300 worth of points and perks

• Net gain: $180

  
  

Look at your spending habits. If you consistently spend on groceries, gas, or travel, premium cards often offer higher earn rates and extra bonuses that add up fast.

2. You Use the Card’s Perks

Many fee-based cards come with extras like:

• Free checked bags on flights

• Airport lounge access

• Hotel upgrades

• Mobile device insurance

• Extended warranties

  
  

If you use even one or two of these regularly, the card pays for itself.

3. The Welcome Bonus Is Huge

Some annual fee cards come with sign-up bonuses worth hundreds of dollars—especially travel cards.

Example:

• TD Aeroplan Visa Infinite: 70,000 points + first-year fee rebate

• Amex Cobalt: Up to 15,000 points for consistent spending

  
  

Even if the fee kicks in the second year, that first-year bonus can deliver way more value than a no-fee alternative.

4. You Travel Frequently

If you fly more than once a year or book hotels often, a premium card can unlock:

• Travel insurance (saves $50–$200 per trip)

• Priority boarding or lounge access

• Better point multipliers on travel purchases

  
  

A no-fee card rarely offers the same level of coverage or perks.

When It's Not Worth Paying the Fee

1. You Don’t Use the Card’s Perks or Bonus Categories

If you have a travel card but never fly, or a grocery rewards card but eat out more than you cook, you’re probably overpaying.

2. Your Spending Is Low or Unfocused

Premium cards reward frequent, targeted spending. If you’re not spending enough in bonus categories—or you carry multiple cards and dilute your usage—you might not get your money’s worth.

3. You Carry a Balance

Paying interest cancels out any reward gains. If you tend to carry a balance, a low-interest or no-fee card is the better choice—every time.

Quick Math Test: Is It Worth It?

Try this:

Annual Fee vs. Annual Value Estimate your yearly rewards and subtract the fee. If the net is positive, it’s worth keeping.If you’re breaking even or losing money, downgrade.

Final Takeaway

When is it worth paying an annual fee on a credit card? When you’re getting more in return—through rewards, perks, or savings—than you’re spending.

Don’t dismiss fee-based cards. Instead, treat them like any other investment: look at the value, not just the cost.