Do Credit Card Annual Fees Count Toward Bonus Spending Requirements?

Aug 22, 2019

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Reader Questions are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.

We’re seeing a noticeable trend in the travel rewards industry as more credit cards shift away from the standard “spend X in the first Y months” bonus structure. Instead, some recent offers have multiple spending tiers that often require you to spend much more in order to unlock the full bonus. As the spending requirements creep higher, people have to get even more creative to earn a welcome bonus. TPG reader Mike wants to know if paying a credit card annual fee counts toward the welcome bonus…

Do annual membership fees count towards bonus spend requirements?

TPG READER MIKE

Generally speaking, cards with higher annual fees often have higher spending requirements to earn a full welcome bonus. For example, The Business Platinum® Card from American Express has a $595 annual fee (see rates & fees) and currently offers a welcome bonus of up to 100,000 points; 50,000 points after you spend $10,000 and an extra 50,000 points after you spend an additional $15,000 all on qualifying purchases within your first 3 months of Card Membership.  But does that $595 fee count?

This is one of the most common questions we get from beginners here at TPG, and so the answer bears repeating: annual fees do not count towards your bonus spending requirement. Unlike some parts of the points-earning process, there isn’t any ambiguity here either. Most credit cards clearly state that fees — including annual membership fees — do not count toward your bonus spending threshold. Here are the terms and conditions on The Platinum Card® from American Express, which clearly state that fees and interest charges don’t count:

And here are the terms for the Chase Sapphire Reserve bonus, which are quite clear in stating that annual fees do not count.

It’s always important to have a plan of how you’re going to meet your minimum spending requirement before you open a new credit card, so keep these guidelines in mind.

In addition, be sure to factor in returns when you’re determining how much you need to spend to earn a welcome bonus. Note that Amex even calls this out in the above language on the Amex Platinum:

“… or if you cancel or return purchases you made to meet the Threshold Amount), we may not credit Membership Rewards points to, we may freeze Membership Rewards points credited to, or we may take away Membership Rewards points from your account.”

Many new cardholders will always spend an extra few hundred dollars above the minimum spending requirement just to include a buffer — just be sure to factor out any annual fee when determining this amount.

Bottom Line

While some policies vary heavily between different card issuers, the answer to this question is nearly universal: Your annual fee does not count toward your bonus spending requirement. You’ll need to make actual purchases in order to earn those bonus points. And again, if you’re working on a new welcome bonus right now, make sure to check out Katie Genter’s list of ways to hit your spending requirement.

Thanks for the question, Mike, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Featured photo by Image Source / Getty Images.

For rates and fees of the Amex Business Platinum card, click here.

2018 TPG Award Winner: Mid-Tier Card of the Year
Chase Sapphire Preferred® Card

NEW INCREASED OFFER: 60,000 Points

TPG'S BONUS VALUATION*: $1,200

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

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More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • No foreign transaction fees
Intro APR on Purchases
N/A
Regular APR
17.99% - 24.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.