“But I don’t want to pay an annual fee on my credit card!” – quashed

I’ve heard it time and time again from friends who want to master the art of flying first-class for next to nothing: “I don’t want to pay an annual fee”. And, to those friends, I understand completely. Some cards have an annual fee of upwards of $100 – or more. But before you settle on that thought, let’s break this down.

First, many credit card products out there offer a fee-free first year &mdash and if you decide to keep a credit card after the first year, sometimes you can talk your way out of paying that fee — or, better yet, getting an additional point bonus for paying that fee. So, you may not have to pay a fee in the first place.

Say you sign up for two credit cards that earn you airline miles, and both of them have a $100 yearly fee attached to them — and through that, you’re able to earn 100,000 just on bonuses alone — enough, in some cases, for a business-class ticket to Europe. Say, then, you keep the card for another year, and spend $25,000 on the card over the course of a year — earning you another 30,000 points total. It’s worth it to pay a fee.

Sure, at the end of the second year, you spent $200 to hold on to two pieces of plastic (usually most cards are fee-free for the first year). But remember that business-class flight you took to Paris with the 100,000 miles you earned? That would have easily set you back $6,000 if you had paid for the flight with cash. It’s worth it to pay a fee.

Or, consider this: 100,000 miles will get you, in some cases, four domestic coach round-trip flights. Say those flights are $400 each — that’s $1,600 you didn’t have to spend (you can also see that the bigger value is flying internationally). It’s worth it to pay a fee.

You’ll also hear on TV about credit cards that are fee-free forever, and that is often the case. But a majority of those times, those types of credit cards will earn you a free domestic flight in coach with the bonus, and maybe another free domestic coach flight for every $40,000 spent. Once again, it’s worth it to pay a fee.

So, next time your friends say that mileage-earning credit cards are bad because there’s a fee, think bigger: would you rather pay $200 plus tax to sit in comfort sipping champagne in the front of the plane, or potentially ten times that to sit in the back of the plane in economy?

Repeat after me: it’s worth it to pay a fee.