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Credit Card Classes for Dummies: Part 3

Discussion of the Cost to hold a Credit Card

From previous parts: Credit Card Classes for Dummies: Part 1(Sigh-up Bonus) and Credit Card Classes for Dummies: Part 2(Earning Structure), you may alreay know that credit cards sound too good to be true. But it does come with some cost. Many cards they do offer 0 annual fee, but some cards, especially that can give you huge rewards, will come with fees. Like the IHG premier card, it has $79 annul fee.

Does it worth that?

First, you need to think about value of the rewards. I do think the sign-up bonus is the most important fact to consider. How do you value 140,000 points and $79? If you think the points are much more valuable than $79, then you can just take it for 1 year. Afte the 1 year, you can rethink a question, do I need to keep it for more years?

To answers this question, you need to notice ONE things in the credit card:

Does the card have any benefits can offset the annual fee?

This IHG card, has several benefits to help us offset the fee.

  1. The annual free night certification, which could be used at any IHG group hotel worldwide. If you search the price of their hotels, you will find this certification’s value is more than $79. But it only happens when you have a travel plan. In other words, if you don’t travel, you will lose money if you want to keep the card continuosouly.
  2. 10% points back for hotel redemption. If you redeem a hotel night using 20000 IHG points, you will get 2000 points back. It is a way to save points, which will help get more free hotel stay.
  3. Book 4 nights in a line, just pay 3 nights’s points. Let’s see one IHG hotel needs 20000 points per night. If you book 4 nights continuosouly, you only need to pay points for 3 nights ,which is 60000 points instead of 80000 points. A huge saving if you need a longer hotel stay!

So, for me, I am travelling every year. And for sure, I can use the free night certification. This year, I have already use my free night and get 10800 points back after I redemped my points. $79 Annual fee is a very good deal for me.

How do you think about it? Please Comment!

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