How Much Charge Volume Do You Need To Make a Travel Rewards Credit Card Worth It?

The idea of a travel rewards credit card sounds fantastic. Book travel through your credit card and get rewards that represent a slight discount on the price.

However, many of the most popular travel rewards cards charge an annual fee. To state the obvious, that means that if you fail to book any travel through the card, you’ll lose money.

As popular as these cards can seem — the idea does sound pretty sweet — you need to charge a certain amount in travel bookings to break even.

How much, exactly, does it take to overcome the annual fee?

How Much Charge Volume Does It Take To Overcome the Annual Fees on a Travel Rewards Credit Card?

How much money does one need to charge on a travel rewards credit card in order to break even?

That’s a question that a listener recently asked money expert Clark Howard.

Asked David in Hawaii: “For premium or travel credit cards, how much does one need to spend annually to make it worth the $500+ fees?

“I understand high-income earners and frequent flyers. But I see many people in my day-to-day life who are in the $40k-$70k income range who only travel a few times a year. They have two or three premium cards.

“So my question is: excluding any signup bonuses and extra random perks that go unused, about how much should one be spending to justify $500 to $1,000 in credit card fees?”

The best travel rewards credit cards in Clark’s estimation offer annual fees between $0 and $695. Clark’s two favorites, Capital One Venture X Rewards Credit Card and Chase Sapphire Reserve®, charge $395 and $550 per year, respectively.

Clark talks about those cards regularly. But David asks an important and pertinent question.

“With any of these, to make them work, at a minimum, you need an average charge volume of $5,000 a month. That’s $60,000 a year,” Clark says.

“So if you have two of them, you need to be spending the equivalent of $120,000 a year to make it worth it. Which means we’re talking about a tiny sliver of the market. People who continually travel for work.

“For everybody else, a cash-back card [with no annual fee] is where the action is if you pay your balances in full.”

Best Standard Rewards Credit Cards

For most people, the best rewards credit cards are more suitable than annual-fee travel rewards cards.

For example, Clark is a huge fan of the Citi^® Double Cash Card – 18 month BT offer. It offers 2% cash back on every category. Clark keeps that card and the Capital One Venture X, one of his favorite annual-fee travel cards, in his wallet.

You can get deep into the credit card rewards game. That sometimes means putting stickers on your credit cards to make sure you remember which card to use for which purchase category. But a simple 2% cash back card is wonderful for most people.

Especially if you’re paying off your balance every month.

Final Thoughts

Travel rewards credit cards with an annual fee require significant charge volume. Clark suggests a travel volume of $60,000 per year, per card.

You can do the math on the specific travel rewards credit card you’re considering. But keep in mind you need to overcome an annual fee. There’s an opportunity cost from a good, standard, free rewards card. And sometimes you won’t want to book travel through your credit card’s platform because it won’t represent the best deal.

Travel rewards cards, especially those with fees, are best left to those who charge tens of thousands of dollars a year in travel.