[Tip] Why it makes sense to pay (some of the) credit card annual fees

Almost all credit cards have an annual fee charged by the banks and they can be up to a couple of hundred dollars.

However, with Singapore being such a competitive market, most banks readily grant annual fee waivers to the customers who request for them. If the banks refuse, one can always cancel the card(s) at no cost.

Despite being additional cost, some of the credit cards’ annual fees are actually worth paying because of one thing: bonus reward points.

Quite a few credit cards in Singapore offer them when the annual fee is paid. Below is the table of these cards:-

Credit cards with annual fee bonus

CardAnnual feeBonus pointsKrisFlyer milesCost per mile
ANZ Travel Visa SignatureS$200.0010,000 Travel$10,000S$0.020
Citibank PremierMiles American ExpressS$267.5015,000 Citi miles15,000S$0.018
Citibank PremierMiles VisaS$192.6010,000 Citi miles10,000S$0.019
Citibank Prestige MasterCardS$535.0062,500 Citi dollars25,000S$0.021
DBS Altitude American ExpressS$192.605,000 DBS points10,000S$0.019
DBS Altitude VisaS$192.605,000 DBS points10,000S$0.019

If one has all the above cards, he or she will have 80,000 KrisFlyer miles after they pay the S$1,700 (inclusive of conversion) each year.

It is enough for one person to fly return on Singapore Airlines Business class to Istanbul!

Haghia Sphia
Hagia Sohpia, Istanbul

I went to find out how much the ticket cost (travel dates 14-25 July 2015) and compare it against the cost when one uses miles from the annual fee bonuses.

Comparison between normal purchase and miles redemption

ModeMiles neededCost of milesCashTotal
Normal purchase00S$5,706.60S$5,706.60
KrisFlyer redemption76,500S$1,700.00S$606.60S$2,303.60

The total outlay using KrisFlyer miles will be around S$2,300, a ~60% discount from the retail price. So it actually makes perfect sense for someone who is looking to fly long haul business class at a discount to pay for the annual fees.

Personally I have two of these cards and I pay their annual fees each year to get the bonus miles since it is a relatively cheap way to top up my Krisflyer account at around 2 SGD cents per mile. These bonus miles enable me to take a shorter time to realize my next redemption.

Will you pay annual fees for bonus miles too? Share your thoughts with us!

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