What Are The Costs?

Time and money are the two costs of learning and practicing cheaper travel. It takes time to learn how to best navigate the world of credit cards and the monetary costs depends on you. Credit cards have a wide range of annual fees that can cost you anywhere from $0 to an upwards of $600 or more per year. There are many options for you to weigh and choose before committing to a specific credit card. Below, you’ll find three different cost categories.

Low to No Cost

Credit cards come with a variety of annual fees depending on the specific card you want to get. No matter what bank you look at, there will be at least one card product that has $0 annual fees. This means that the bank does not charge you anything to open or keep this card year after year, unless terms change per the bank. However, cards with no annual fees tend to have "bare bones" perks such as 1-2% cash back or 1-2x points on certain purchases. They tend to also have lower sign up or welcome bonuses compared to higher cost cards. But that does not mean that they are not good credit cards to get or keep. They play a vital role in collecting points on a day to day basis.

Average Cost

Next, you have what I call the "mid tier" cards. This refers to credit cards with annual fees around $95 to $250. With these mid tier credit cards, you will begin to see some additional perks and benefits such as increased bonus points on specific categories. For example, some cards may have 4x points on restaurants, gas, groceries, airline tickets, internet, etc. Other benefits you may see in this tier are airline or hotel elite statuses and free hotel nights. These are the cards that you'll want to start weighing the cost and benefits and see if they are right for you.

High Cost

Lastly, you have what I refer to as "premium" or "high end" credit cards. These credit card products have the highest annual fees that you will come across. You will see annual fees commonly around $400 to $695. However, do not let the price tags on these high end cards discourage you from considering them for your wallet. Some high end cards will provide you with a travel credit, higher tier elite hotel or airline status, the highest bonus points earning categories, and more. If you sit down and add up all the benefits, credits, perks, access, and coverage these cards provide, most of the time the value you can get from these cards will outweigh the annual fee. This is generally true for the first year of the credit card since the bonus points for signing up is of such great value.

Wrap Up

To wrap this up, the cost of collecting points and miles is up to you. It all depends on what you can afford, what you want out of a credit card, what you will find most useful, and how much time you want to invest learning. Your situation is different from everyone else so some credit cards will benefit you more than others. Do the math and choose what is best for you.