Should you pay your credit card annual fee to earn miles?

No one enjoys paying their credit card’s annual fee, but the good news is that unlike cashback cards, you often won’t walk away empty-handed. That’s because the vast majority of general spending cards offer miles in exchange for paying their annual fee. Those miles have a value, which helps offset the fee- but to what extent? 

In this post, we’ll look at which card offers the best deal for paying your annual fee (and whether you should pay it in the first place).

Which credit cards offer miles with the annual fee?

Below is a list of all the credit cards that offer miles with annual fee payment. 

💳 Miles with Annual Fee
Card	Annual Fee	Miles	CPM
HSBC Visa Infinite (Premier) Apply	S$497.12	35,000 1st Year Only	1.42¢
SCB Visa Infinite Apply	S$599.50	35,000 1st Year Only	1.71¢
HSBC Visa Infinite (Regular) Apply	S$662.15	35,000 1st Year Only	1.89¢
OCBC 90°N MC Apply	S$196.20	10,000	1.96¢
OCBC 90°N Visa Apply	S$196.20	10,000	1.96¢
Citi PremierMiles Apply	S$196.20	10,000	1.96¢
DBS Altitude AMEX Apply	S$196.20	10,000	1.96¢
DBS Altitude Visa Apply	S$196.20	10,000	1.96¢
HSBC TravelOne Card Apply	S$196.20	10,000	1.96¢
KrisFlyer UOB Credit Card Apply	S$196.20	10,000	1.96¢
SCB Journey Card Apply	S$196.20	10,000	1.96¢
Citi Prestige Apply	S$545	25,000	2.18¢
DBS Vantage Apply	S$599.50	25,000	2.40¢
UOB VI Metal Card Apply	S$654	25,000	2.62¢
OCBC VOYAGE Apply	S$498	15,000	3.32¢

Here’s a few additional things to consider.

Annual Fee divided by miles, not the other way round

When considering the cost of miles, you should always take the annual fee divided by the number of miles received, not the other way round.

For example, if you pay a S$196.20 annual fee and get 10,000 miles, then the cost per mile is 1.96 cents, give or take.

Why not do it the other way round? It might be tempting to say, “well, I paid S$196.20 and got 10,000 miles- that’s 51 mpd, an incredible rate and a no brainer!” Stop right there. 51 mpd would be an incredible rate, but that’s conceptually flawed.

When you spend on day-to-day items with your card, miles are a byproduct. In other words, you get the good or service, plus miles. When you pay the annual fee on your card, you’re paying for miles directly. It’s not the same thing.

First year vs recurring

Does the card award miles for paying the annual fee every year, or just in the first year?

If you hold an HSBC Visa Infinite or SCB Visa Infinite, miles are only awarded for the first year’s annual fee. In subsequent years you’ll need to call in to appeal, and even then, will typically get a reduced amount (e.g. the SCB Visa Infinite usually offers 20,000 miles instead of 35,000 miles from year 2 onwards).

For all other cards, you’ll receive the same number of miles every year you pay the annual fee.

Annual fee waivers

Annual fee waivers are possible with certain cards, but if the fee is waived, you won’t receive any miles.

For example, here’s how it works with the DBS Altitude.

Upon renewal of annual membership and principal Card annual fee imposed, principal Cardmembers are eligible to receive bonus 10,000 miles (equivalent to 5,000 DBS Points). The 5,000 DBS Points will be credited to the principal Card account when annual fee of S$196.20 is charged. If the annual fee is automatically or subsequently waived, 5,000 DBS Points given will be reversed upon annual fee waiver

The sole exception to this rule is the UOB PRVI Miles AMEX, which flips the script. 

Apply

The UOB PRVI Miles AMEX does not award any miles with the payment of its S$261.60 annual fee. However, if you spend at least S$50,000 in a membership year, the annual fee is waived, and 20,000 miles awarded.

Are there other benefits to take note of?

While it may be tempting to compare cards on the basis of cost per mile (i.e. annual fee divided by miles received), that could be overly simplistic in some cases. 

For example, the Citi Prestige has a cost per mile of 2.18 cents (S$545/25,000), compared to the HSBC Visa Infinite’s 1.89 cents (S$662.15/35,000). But we can’t immediately conclude that the Citi Prestige is inferior, because it has perks like the 4th night free on hotel stays, a wider variety of transfer partners, one free guest for lounge visits and the Citi PayAll facility.

I would say this tends to be more of a consideration for the cards in the $120K segment. If we’re talking about entry-level cards like the DBS Altitude or Citi PremierMiles, which don’t have much benefits to speak of, then a cost per mile comparison might be more appropriate (and anyway they all come out around the same). 

Is it worth it?

As with all “worth it” questions, we need to go back to our value of a mile. 

How much is a KrisFlyer mile worth?

My personal valuation of a mile is around 1.5 cents, but yours may be different based on your earning and burning patterns. 

I will say, however, that buying miles through annual fees is not the cheapest way of going about it. It’s possible to generate miles from paying bills through platforms like CardUp and Citi Payall from as little as 1.1 cents each. 

Therefore, you should only buy miles from your annual fee if you’ve exhausted the options above. 

Conclusion

Credit card annual fees are an annoyance, but at least you’ll usually get some miles in return for paying. However, paying the annual fee is usually not the best way of buying miles. If you need to top-up your account, any of the bill payment services out there will typically offer a lower cost per mile. 

It’s for that reason that I try and get a fee waiver wherever possible, unless you’re talking about a premium segment card that comes with benefits beyond just the miles.