By Bryce Casson, Founder · Cardocrat · Updated June 2026
The short answer: Several issuers let you apply points toward your card annual fee, which feels like making the fee disappear. But the points are valued at roughly a cent each or less, below what they are worth almost anywhere else, so you are spending high-value points to cover a cash cost. Pay the fee in cash and keep your points for a redemption worth far more.
How paying the fee with points works
Some issuers, including Amex through its option to cover charges with points, let you redeem points against your statement to offset an annual fee. It is marketed as a way to soften or erase the fee, and psychologically it works, the fee feels free. Financially, though, you are simply selling your points back to the issuer at the rate it chooses, which for these statement redemptions is usually about a cent each or even less. See what points are worth.
Why it is a poor use of points
The annual fee is a fixed cash cost, and the cheapest way to pay a cash cost is with cash. Covering a 95-dollar fee with points at a cent each burns 9,500 valuable points to save 95 dollars, when those same points could be worth 190 dollars or more transferred to a travel partner. You would never choose to sell your points for a cent if asked directly, but that is exactly what paying the fee with points does. See whether the fee is worth it.
Pay cash, keep the points
Treat the annual fee as a cash expense and judge the card on whether its credits and rewards justify that cash, which is the right way to evaluate a fee anyway. Then keep your points for the redemptions that return real value. If a card fee genuinely is not worth paying in cash, the answer is to downgrade or cancel the card, not to disguise the fee by spending points at a poor rate. See when to use cash instead of points.
Frequently asked questions
Can I pay my credit card annual fee with points?
Many issuers let you, including Amex via its option to cover charges with points. But the points are usually valued at about a cent each or less, so it is a poor use of points compared with paying the fee in cash.
Why is paying the annual fee with points a bad idea?
Because it spends points worth potentially two cents or more on travel at roughly a cent each to cover a fixed cash cost. Paying the fee in cash and keeping the points for a high-value redemption leaves you better off.
How many points does it take to cover an annual fee?
At about a cent per point, a 95-dollar fee takes roughly 9,500 points and a 550-dollar fee around 55,000. Those points are usually worth far more redeemed for travel, which is why paying in cash is the better move.
What if the annual fee is not worth paying?
Then downgrade or cancel the card rather than masking the fee by redeeming points at a poor rate. Judge a fee on whether the card credits and rewards justify it in cash, not on whether points can hide it.
Bryce Casson, Founder of Cardocrat. Every card is ranked by what it actually returns, with all points valued at a flat 1 cent and offers verified against issuer sources. About the author.
