No one likes paying annual fees.

But with credit cards, we generally justify paying an annual fee when we’re earning enough rewards to cover the cost.

The tricky part is figuring out exactly when those scales tip, making the fee totally worth it.

Our rule of thumb for cards with annual fees greater than $99 is to have roughly $1,200 in monthly spending on it.

But what about cards that have an annual fee of $65 or less? Where is the cutoff for these cards?

Let’s dive in and explore some options.

Related: Best No Fee Cash Back Cards

A general formula

The general formula for calculating the monthly spend needed to offset an annual fee between two cards is the following:

(Difference in annual fee) / (Difference in earn rate) / 12 = Monthly required spend

Seems simple, right? …Not quite.

While this works perfectly for cards that have flat earn rates, cards with category multipliers are another story.

With these cards, the earn rate changes based on your spending in specific categories and is never set.

Looking for an easy way to figure it out?

Use our compare cards page.

Simply enter your monthly spend breakdown, then hover the total annual rewards for the cards you’re looking at. You’ll see the exact return for your rewards after annual fees and see if it’s worth it.

With that said, let’s determine a rough guideline as to when a low-fee card makes sense over a no-fee option.

We’ll dig into a few examples with similar cards & rewards programs, and see what spending level is required to start considering a low-fee card.

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MBNA Smart Cash Platinum Plus vs Smart Cash World Mastercard

The first comparison is the MBNA Smart Cash Platinum Plus Mastercard & the MBNA Smart Cash World Mastercard.

While they are very similar cards, the World version has a higher earn rate on general spend and a $39 annual fee.

Let’s compare by using a $500 spend to see where they land.

Spend Category & Monthly Spend MBNA Smart Cash Platinum Plus Mastercard MBNA Smart Cash World Mastercard
Earn Rate Rewards Earn Rate Rewards
Gas – $50 2% (up to $500 monthly spend combined with grocery) $12 2% (up to $500 monthly spend combined with grocery) $12
Grocery – $87.50 2% (up to $500 monthly spend combined with grocery) $21 2% (up to $500 monthly spend combined with grocery) $21
General – $362.50 0.5% $21.75 1% $43.50
Total Rewards 1.25% $54.75 1.5% $76.50
Annual Fee $0 ($39)
Net Rewards $54.75 $37.50


As you can see, spending $500 a month on your card isn’t enough to push the World over the Platinum Plus.

But don’t trash the World Mastercard just yet! Watch what happens when monthly spending is increased to $1,000 a month.

Spend Category & Monthly Spend MBNA Smart Cash Platinum Plus Mastercard MBNA Smart Cash World Mastercard
Earn Rate Rewards Earn Rate Rewards
Gas – $100 2% (up to $500 monthly spend combined with grocery) $24 2% (up to $500 monthly spend combined with grocery) $24
Grocery – $175 2% (up to $500 monthly spend combined with grocery) $42 2% (up to $500 monthly spend combined with grocery) $42
General – $725 0.5% $43.50 1% $87
Total Rewards 0.95% $109.50 1.3% $153
Annual Fee $0 ($39)
Net Rewards $109.50 $114


At $1,000, the World gets a slightly higher net return.

Does that make $1,000 the magical number? I would say it’s close.

It’s worth noting, however, if you spend more (or even less) on gas and groceries your magic number is going to change accordingly.

Tangerine Money-Back Mastercard vs Scotiabank Momentum Visa

Now let’s compare the Tangerine Money-Back Credit Card and the Scotia Momentum Visa.

Both cards offer earn rates of 2%, but the Scotiabank Momentum Visa offers additional 2% categories and 1% on everything else for an annual fee of $39.

Let’s start with our previous $500 spend.

Note: These calculations assume you’re getting three 2% categories on the Tangerine card.

Spend Category & Monthly Spend Tangerine Money-Back Mastercard Scotiabank Momentum Visa
Earn Rate Rewards Earn Rate Rewards
Gas – $50 2% $12 2% $12
Grocery – $87.50 2% $21 2% $21
Bill Payment – $75 2% $18 2% $18
Drugstore – $25 0.5% $1.50 2% $6
General – $262.50 0.5% $15.75 1% $31.50
Total Rewards 1.13% $68.25 1.47% $88.50
Annual Fee $0 ($39)
Net Rewards $68.25 $49.50

At $500, the Tangerine Card comes out on top, but what happens if monthly spend is increased to $1,000?

Spend Category & Monthly Spend Tangerine Money-Back Mastercard Scotiabank Momentum Visa
Earn Rate Rewards Earn Rate Rewards
Gas – $100 2% $24 2% $24
Grocery – $175 2% $42 2% $42
Bill Payment – $150 2% $36 2% $36
Drugstore – $50 0.5% $3.00 2% $12
General – $525 0.5% $31.50 1% $63
Total Rewards 0.95% $136.50 1.43% $177
Annual Fee $0 ($39)
Net Rewards $136.50 $138


If you’re spending $1,000 a month, it might makes more sense to go with the Scotiabank Momentum Visa over the Tangerine card.

Added Bonus: If you shop at Costco, you might want to carry both cards in your wallet.

Use your Tangerine Mastercard at Costco and pick 3 categories that are different than what the Scotiabank Momentum Visa offers. This way, you’ll earn 2% in 7 categories, earn rewards at Costco, and only pay $39 dollars a year.

Related: The Best Credit Cards for Shopping at Costco

Let’s move on to another example involving a card with a slightly higher annual fee.

AIR MILES comparison

Finally, a comparison between two AIR MILES cards – the BMO AIR MILES Mastercard and the American Express AIR MILES Platinum Credit Card.

While the Amex card has the ability to earn up to 1 mile per $10 spent on gas, grocery, and drugstore purchases, as well as all AIR MILES sponsors, the BMO card will only earn that for a select few AIR MILES retailers.

We’ll start with an annual spend of $1,000, and assume 25% of all spend is done at AIR MILES sponsor locations.

Please note: We value an AIR MILE at 17.2 cents.

Spend Category & Monthly Spend BMO AIR MILES Mastercard Amex AIR MILES Platinum
Earn Rate Rewards Earn Rate Rewards
Gas – $100 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$12.90 * 1 mile per $10 spent $20.64
Grocery – $200 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$25.80 * 1 mile per $10 spent $41.28
Drugstore – $50 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$6.45 * 1 mile per $10 spent $10.32
General – $650 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$83.85 * 1 mile per $15 spent everywhere
* 1 mile per $10 spent at sponsors
$100.62
Total Rewards 1.25% $129 1.5% $172.86
Annual Fee $0 ($65)
Net Rewards $129 $107.86

By maximizing the use of AIR MILES sponsors, the BMO AIR MILES card comes out slightly ahead.

Let’s repeat this, but with 5% of all spend at sponsors and an increase in gas and grocery spend.

Spend Category & Monthly Spend BMO AIR MILES Mastercard Amex AIR MILES Platinum
Earn Rate Rewards Earn Rate Rewards
Gas – $150 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$16.25 * 1 mile per $10 spent $30.96
Grocery – $300 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$32.51 * 1 mile per $10 spent $61.92
Drugstore – $50 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$5.42 * 1 mile per $10 spent $10.32
General – $500 * 1 mile per $20 spent everywhere
* 1 mile per $10 spent at sponsors
$54.18 * 1 mile per $15 spent everywhere
* 1 mile per $10 spent at sponsors
$69
Total Rewards 1.25% $108.36 1.5% $172.20
Annual Fee $0 ($65)
Net Rewards $108.36 $107.20

Related: Best AIR MILES Credit Cards

Low-fee cards deserve more love

Low-fee cards are rarely talked about because they are overshadowed by their no-fee counterparts. Then, if you are looking for premium rewards and perks, the tendency is to jump straight up to the $99+ annual fee cards.

After looking at these comparisons, a low-fee card (compared to a no-fee card) starts to earn better rewards around the $1,000 range. And by increasing your monthly spend, the low-fee card becomes more and more worth it.

The big surprise here is that those highly touted no-fee cards actually start to lose out to cards with a $39 annual fee quite quickly. And, in the case of the MBNA Smart Cash World Mastercard, you can get a full 1% cash back on your Costco purchases making it worth it just for that.

Keep in mind that it also depends on your spend levels within the higher-reward categories.

Most of the cards had the same level of earnings on these categories, so if most of your spending is within them, then the higher annual fees won’t make much sense.

Similarly, with the AIR MILES cards, if you spend a lot at sponsors, paying an extra annual fee won’t make sense, since you’ll earn the same number of rewards with them as you would with another AIR MILES credit card, regardless of fee.