Annual Fee Breakeven Calculator
Determines the spending required to offset a credit card's annual fee with rewards.
Breakeven Analysis
Required Annual Spend
How This Tool Works
This calculator helps you decide if a premium credit card is worth its annual fee by calculating the "Break-Even Spending" point.
- Formula:
(Annual Fee - Credits) / Reward Rate = Break-Even Spend. - Logic: We strip away the marketing fluff (credits) to find the "True Cost" of the card, then calculate how much you must spend to earn that back in rewards.
- Assumptions: We assume you will actually use the credits you enter. If a credit is hard to use (e.g., a monthly gym stipend you don't need), don't include it.
How to Use (Steps)
- Enter Annual Fee: The sticker price of the card (e.g., $95, $250, $695).
- Estimate Reward Rate: Your average return on spending (e.g., 2% or 1.5%).
- Add Credits: Enter the dollar value of stipends you will definitely use (e.g., $300 travel credit).
- Calculate: See the exact dollar amount you need to spend to break even.
Example Calculation
Card: Premium Travel Card ($250 Fee).
• Credits: $100 Airline Credit (Effective Fee = $150).
• Reward Rate: 2% on all purchases.
• Break-Even: $150 / 0.02 = $7,500 Spend.
• Verdict: If you spend less than $7,500/year, you are losing money.
Why This Tool Is Accurate
Many people forget to deduct credits, making fees look scarier than they are. Conversely, many forget that "breaking even" just means you are at $0 profit. You need to spend more than the break-even point to actually benefit.
Limitations & Disclaimer
This tool assumes a flat reward rate. In reality, cards have tiered categories (e.g., 4x on dining, 1x on everything else). Use your average effective rate for the best results.
Frequently Asked Questions
Usually, yes. Unless the card offers "soft benefits" like airport lounge access, free checked bags, or elite status that you value highly, paying a fee without earning it back is a loss.
For the first year, yes! A sizable bonus (e.g., $500 value) can easily offset a fee. But the "Break-Even" calculator is most useful for deciding whether to keep the card in Year 2 and beyond.
Yes. Most banks allow you to "product change" to a no-annual-fee version of the same card. This preserves your credit history and credit line without costing you money.