Should you pay your credit card’s annual fee?

tl;dr: No

I wrote about how you can make some good money just by signing up for credit cards. Most of those cards waive the first year’s annual fee. But all of them will charge you an annual fee from the second or third year onwards.

How to avoid credit card annual fees?

1. Use our credit card management sheet to keep track of your credit card’s ‘anniversary’ and cancel those cards about a month before that. There will be no charges for cancelling your credit cards if you have paid off your outstanding balance.

2. Wait for the annual fee to appear in your card’s statement and call in to request for a waiver. If the waiver is not successful, you will have the option to cancel the card right away without needing to pay the annual fee.

Remember, you should never be forced to pay your credit card’s annual fee.

When should you voluntarily pay your credit card’s annual fee?

Most credit cards that offer miles/points offer miles/points in return for the annual fee. This is one way to ‘buy’ miles. I wrote about my valuation of miles and points.

Let’s take DBS Altitude Visa for an example. I will receive 5,000 DBS Points (10,000 miles) if I pay the annual fee of $192.60. Upon using my calculator, I found that 10,000 Krisflyer miles are only worth $170 according to my valuation.

Unless if I desperately need these miles for a redemption, I will be requesting for an annual fee waiver instead.

It is never a good idea to ‘collect’ miles without having a redemption in mind as Frequent Flyer Programs are constantly depreciating the value of their miles in 1 to 4-years cycles.

Hence, you should only ‘buy’ these miles if:

1. The cost per mile is below or close to your valuation of a mile

2. You need the miles urgently for an upcoming redemption