Many people are scared to pay for credit card annual fees. I get it. Why pay for annual fees when you can get credit card without any annual fees? But, I think many people also fail to see the benefits of credit cards with annual fees. If you like travelling and pay for flights out of pocket every year, I beg you to reconsider your strategy. If you like saving money, then going for credit cards will be in your best interest.
VIDEO – Don’t Be Afraid To Pay For Travel Credit Card Annual Fees
Booking out of pocket versus using credit card points
Using a flight from Vancouver to Cuzco in Peru as an example, we can determine if it’s more cost-effective to book out of pocket or use Aeroplan points.
We can start by searching the cheapest flight possible from Vancouver to Cuzco, Peru using Skyscanner.
Base on the search, the cheapest flight is $935 CAD. This flight has long layovers as well.
Next, let’s search for how much points it cost to fly from Vancouver to Cuzco using Aeroplan.
It looks like a round-trip flight from Vancouver to Cuzco will cost 80,000 Aeroplan points. Taxes and fees should be about $150.
Which credit card can get you 80,000 Aeroplan points and has an annual fee? Well, the American Express Business Platinum card gives you 75,000 AMEX points (transferrable to Aeroplan at a 1:1 ratio). After hitting the minimum spend of $7000, you will get an additional 7000 points. In total, you will earn 82,000 Aeroplan points after you do a points transfer.
The credit card has an annual fee of $499. If you add the annual fee with $150 in booking fees and taxes, the total cost of a round-trip flight to Cuzco from Vancouver is $649.
So you can see that you’re already saving $286 by going the credit card route. You’ll also get a priority pass which gives you unlimited lounge access.
By going the credit card route, you not only save money, you also get extra perks such as a lounge access. Don’t be scared of annual fees. Instead, crunch the numbers and see if it makes logical sense to go the credit card route.
I know some people think this is a time consuming process. Even if you make over 6-figure income, it’s really not that hard to use this strategy. You simply apply for the credit card and use it to pay for your expenses. Then use your points to book your flight. It’s really that simple.
Don’t fear credit card annual fees.