As noted above, getting a good rewards credit card doesn't require paying an annual fee. Most cash back credit cards carry no fees and these are often the best credit cards for reward seekers. However, many airline credit cards, as well as most high-end rewards cards, carry annual fees. Whether or not it is worth paying that annual fee is a question worth exploring.
Let's start with airline credit cards. Rewards cards tied to a specific airline almost always carry annual fees that can range from $50 to $400, depending on the card you choose. Some of these airline specific cards offer special perks and accelerated ways to earn miles on a particular airline. But if you tend to shop for the best flight prices, you may run into situations where you're better off having the flexibility of a general miles reward card. Plus, to earn back your $50 annual fee, you'll have to spend $5,000.
If you have a general airline rewards card with no annual fee, you'll have 5000 miles after you spend $5,000. If you use an airline specific card, you'll have paid $50 for the same amount of miles.
Premium rewards credit cards also come with annual fees that can also be as high as $500. However, some people may enjoy the benefits that come with an American Express® Platinum card and find the annual fee worth paying. However, it does take $40,000 of spending to break even on that card's annual fee, so unless you use your credit card to buy a new Lexus every year, reaching the break even point can be difficult.
Ultimately, the best credit card for you is the one that earns you the most rewards, net of any annual fees. Flexibility is a plus, which makes cash back credit cards a great option, but value is the most important thing.
Credit Card Rewards Tips
How to Earn Credit Card Rewards: I pay for everything I possibly can with a credit card to rack up rewards. The end result: my credit card company pays me about $600 a year to use their card. In this article, I demonstrate how you can profit from credit card rewards the same way I do.
Credit Card Rewards Calculator: The rewards calculator allows you to estimate how much you can earn in cash back, airline miles or (ugh!) points with a rewards credit card. All you need to do is guesstimate how much you spend on groceries, gas and other purchases and the calculator goes to work.
Points are NOT the Best Credit Card Rewards: Would you rather have 10,000 reward points or a hundred dollar bill? If you chose the points, I'm not sure if I can help you. Rewards points from some companies are significantly better than others, but as in life, cash is king. This article explains why.
Cash Back is the Best Credit Card Reward: Rewards points can decrease in value anytime a credit card company wants them to. Frequent flyer miles can be great-but only if you know how to use them. So, as I say a hundred times on CardWisdom, when it comes to rewards, cash is king.
