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Why it can be worth paying an annual fee for a miles and points credit card

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I get numerous emails from Head for Points readers asking for advice on which miles and points credit card they should get.  These often come with the caveat “but I don’t want to pay a fee for a card”.

I don’t agree with this approach.  Let me explain why.

Most credit cards in the UK do not carry an annual fee.  It is very likely, before you became interested in miles and points, that you had never paid a fee for a credit card in your life.

I can see why you wouldn’t want to.  You know that the card company gets a cut from the retailer every time you buy something.  You know that they add a 3% foreign exchange fee whenever you spend abroad, and whenever you end up withdrawing some cash on it (which, however much you try to avoid it, always happens once or twice a year).  You may accidentally miss a payment date occasionally and run up some interest.  Paying for the privilege of generating this revenue for the credit card company seems wrong.

I think you need to look at it differently.  Forget that you are paying for a credit card.  Look at it as simply paying for the benefits offered.

Should you pay a fee for a credit card?

Taking the British Airways Premium Plus card as an example

Some people take one look at the £195 annual fee on the British Airways American Express Premium Plus credit card and are put off instantly.

Purely from the point of view of the sign-up bonus, being put off by the fee is a mistake, of course.  The card is currently offering 25,000 Avios for signing up when you spend £3,000 within 90 days.  The majority of Head for Points readers would jump at the chance of buying 25,000 Avios for £195 which is basically what you are doing.

The fee becomes even more realistic when you look at the 2-4-1 voucher:

Would you pay £195 to buy a voucher which allowed you to get two Avios redemptions (BA planes only) for the miles of one?  This would save you 180,000 Avios on two Club World tickets to Tokyo for example.

This is clearly a ‘no brainer’ for anyone who understands the value of Avios.  180,000 Avios are worth at least £1,800 if used sensibly.  More importantly, if you wouldn’t otherwise be able to earn enough Avios for two Club World tickets to Tokyo, it lets you undertake a trip that would otherwise be impossible.

You need to spend £10,000 to trigger the voucher each year, of course, but you need to channel your credit card spend somewhere anyway.  The £195 fee also lets you earn 50% more Avios on every purchase – 1.5 per £1 – compared to the free British Airways American Express card and you get a 2-4-1 voucher valid for two years rather than one year.

If you think that spending £10,000 on an American Express card in a year is tricky, don’t forget about BillhopWe covered this service again a couple of weeks ago – it allows you to pay any household bill (not a mortgage or credit card) with an Amex card in return for a fee.  This is a good way of running up a few thousand pounds of Amex spend if you are short of £10,000.

Should you pay an annual fee for a credit card?

And some other examples …..

Here are some other examples where, if you treat the fee as paying for a benefits package, it makes sense:

Would you pay £99 per year for Platinum status (2nd tier) in IHG Rewards Club – which usually needs $4,000 of ex-VAT hotel spending – plus a free night in any of their hotels, potentially worth £250+? Especially if you got £100-worth of IHG Rewards Club points in the first year you signed up?

When you put it like that, the IHG Rewards Club Premium Mastercard sounds like a good deal.  You need to spend £10,000 per year to trigger the free night, but you need to put your credit card spend somewhere.

Would you pay £140 per year for the right to upgrade two Virgin Atlantic economy redemptions to premium economy, or to get a 2-4-1 voucher on economy redemptions?  Especially if you also got 15,000 Virgin Flying Club miles in the first year for signing up?

When you put it like that, the Virgin Reward+ Mastercard looks good value (you need to spend £10,000 to trigger the two vouchers).  That’s before you factor in the excellent ‘1.5 miles per £1’ earning rate.

Would you pay £575 per year to get travel insurance for your family and five other nominated people under 70 years old, car hire insurance, Hilton Gold, Marriott Gold, Radisson Rewards Gold, Shangri-La Jade, Melia Gold, Eurostar lounge access, Delta lounge access, two Priority Pass cards each admitting two people for free to 1000 airport lounges, and exclusive benefits at luxury hotels including guaranteed 4pm check-out?  Especially if you got 30,000 Avios or other miles in your first year?

This is clearly more of a ‘heavy hitters’ package, but the American Express Platinum charge card will give you all of the above.

Is it worth paying a fee for a credit card?

Not all credit cards justify their fee …..

I don’t want to suggest that all fee-bearing miles and points cards justify the annual fee.

American Express Preferred Rewards Gold is harder to justify after the free first year.  You are paying £140 from year 2, with the main benefit being two free airport lounge passes.  It might work if you spend £15,000 to trigger the annual bonus of 10,000 Membership Rewards Points, but I would consider it marginal.

The Lufthansa Miles & More Diners Club and Mastercard has a £79 fee.  For the first year it is worth it for the 10,000 miles sign-up bonus.  After that, even the strong earning rate of 1.25 miles per £1 doesn’t justify the fee unless you are spending a chunky sum each year.  For many people the only reason for paying £79 is that having this card, and using it once per month, stops your Miles & More miles expiring.

The Starwood Preferred Guest American Express card has a £75 fee.  Similarly, for the first year it is worth it for the 30,000 Marriott Bonvoy points sign-up bonus.  Even at 3 Marriott Bonvoy points per £1, however, you need to a big spender to justify £75 for Year 2+.

However, if you can get your head around the concept of paying an annual fee, you will find that many miles and points card do offer value for money.

Should you pay an annual fee for a credit card?

Learn more about the credit cards mentioned above

Here is the legally required interest rate information on the credit cards mentioned above, together with links to our detailed reviews:

American Express Preferred Rewards Gold – sign-up bonus of 10,000 Membership Rewards points when you spend £3,000 in three months – apply hereour American Express Gold review is here – representative APR 57.6% variable including fee (free in year 1) based on a notional £1200 credit limit, interest rate on purchases 22.9% variable

The Platinum Card from American Express – sign-up bonus of 30,000 Membership Rewards points when you spend £4,000 in three months – apply hereour American Express Platinum review is here – this is a charge card which must be repaid in full each month

British Airways American Express – sign-up bonus of 5,000 Avios when you spend £1,000 in three months – apply hereour BA Amex review is here – representative APR 22.9% variable

British Airways American Express Premium Plus – sign-up bonus of 25,000 Avios when you spend £3,000 in three months – apply hereour BA Amex Premium Plus review is here – representative APR 76.0% variable including fee based on a notional £1200 credit limit, interest rate on purchases 22.9% variable

Starwood Preferred Guest American Express – sign-up bonus of 30,000 Marriott Bonvoy points when you spend £1,000 in three months – apply hereour Starwood Amex review is here –  representative APR 39.7% variable including fee based on a notional £1200 credit limit, interest rate on purchases 22.9% variable

Virgin Atlantic Reward+ Mastercard – sign-up bonus of 15,000 Virgin Flying Club miles after your first purchase – apply hereour Virgin Atlantic Reward+ review is here – representative APR 63.9% variable including fee based on a notional £1200 credit limit, interest rate on purchases 22.9% variable

Miles & More Global Traveller Diners Club and Mastercard – sign-up bonus of 10,000 Miles & More miles after your first purchase – apply here – our Miles & More Traveller review is here – this is a charge card and your balance must be cleared in full each month

Disclaimer: Head for Points is a journalistic website. Nothing here should be construed as financial advice, and it is your own responsibility to ensure that any product is right for your circumstances. Recommendations are based primarily on the ability to earn miles and points and do not consider interest rates, service levels or any impact on your credit history.  By recommending credit cards on this site, I am – technically – acting as a credit broker.  Robert Burgess, trading as Head for Points, is regulated and authorised by the Financial Conduct Authority to act as a credit broker.

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  1. With any of the decent Marriott hotels at level 5 and above, costing circa 40,000 points a night at a minimum before peak pricing, it is getting much harder to justify the Marriott card, which I have just cancelled.

    • The Urbanite says:

      I am keeping mine. I put a lot of spend through it so view the earning rate as 1.25 miles per £1 in most of the airline schemes they partner with.

      Although there’s a lukewarm view of the free night certificate, I found a use for it at the Marriott in Swansea for which the cash rate was £134. I don’t use Marriott points for hotel stays – I prefer the IHG and Hilton schemes, but points do come in useful for airlines if you spend enough.

  2. Planning Geek says:

    The week link in the fees is the free economy flight on Virgin.

    How many readers will use that 2 for 1.

    I know I will not. It will be wasted.

    • I totally agree. I would be interested if anyone has found some value as the taxes/surcharges in the examples I have looked at has made it worthless.

  3. I wasted my Lloyds upgrade voucher as I used up all my free minutes that month waiting on hold for them to answer, and the agent that did answer refused to use avios from my household account and I didn’t feel like waiting another hour to try again.

    Then the Swiss and Lufty sale came up and I booked all the trips I had been thinking about, for pretty much the same price all-in as BA’s fees and better choice of dates.

    The £24 fee more or less covered the higher earning rate so not too bothered. But this is why I don’t bother with the BA 241, I have never been in a situation where I wanted to book a trip and wished that I had one.

    The only other card I’ve paid a fee for was the IHG Barclaycard and that was good value earning me Hilton diamond through £20K of cash withdrawals. I find I can easily renew Hilton diamond when I have it already, but I wouldn’t have chosen Hiltons if starting from scratch.

    • The Streets says:

      You can only use your personal amount of avios with the upgrade voucher and not from others in your household account

    • Peter K says:

      Your IHG card got you Hilton status? Either you are confused or you used a status match… And retaining Hilton Diamond as the same as earning it, you just gain the benefits in the mean time.

  4. Gary Zawadzki says:

    O/T – does anyone know if we can expect another Amex platinum house event for London fashion week this year?

  5. Mikeact says:

    Any particular Tesco card/s ? …. with Avios in mind.

  6. OT but BA related.

    Any trick (other than phoning up BA for explanation) to avoid BA’s fees which are more than £17.50 one way for short haul Reward Flight Saver?

    I am consistently getting fees which are £25 or more for both Peak and Offpeak dates with corresponding Avios which are as per published numbers except the fees and taxes element as above.

    • European Business class flights are £25 each way. It is only Economy flights which are £17.50 e/w

      • Sorry, I should have made it clear.
        It is for economy flights and taxes + fees element which should be £17.50 is coming up as £25 +

        Of course there is a 50P taxes + fees element as well which is a poor deal and none of HFP reader will go for it, except in case their plan is tentative.

    • You need to have earned at least 1 Avios in the previous 12month for the RFS rate.

      • I have earned many avios via Amex BAPP as well as many paid BA/Iberia flights.
        So don’t think that is an issue.

        I might try booking on other members in HHA who have not earned Avios

    • Just an update:

      The BA metal will continue to be Avios + £17.50 OW for RFS short haul.
      However if it is partner like Iberia then it will be whatever the actuak taxes + fees in addition to Avios.

  7. I found the SPG worth the fee when it doubles the points earned compared to the American express rewards card

  8. OT – BA On Business

    Just to report, BA On Business seem to be a hit and miss for bookings via Travel agents, specially if it involves Fights + Hotels.

    On my two separate work trips, for first I did get BA On Business points but on second trip it was denied with a reason “ineligible fligh”.

  9. BA RFS – Is only 50p cancellation on RFS ticket still working for new bookings?
    This is even if least avios + most £ in taxes and fees element bookings.

  10. I had a spend £350 get 4000 MR points with Hilton. I have spent over £500 at £100 a time usually always it triggers as cumulative spend but doesn’t seem to have done it this time.

  11. Rob Clark says:


    If I have a free BA AMEX with my wife as a second card holder. If we apply for Premium Plus with her as the primary holder would we trigger the sign up bonus?

    Thank you,

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