Money Clarity

Is your credit card annual fee paying for itself?

Add up the rupee value of what you actually redeemed last year, plus benefits you genuinely used, and subtract the annual fee. If the result is negative, the card is a subscription you are paying for the privilege of spending. Most premium cards fail this test for most holders, which is not an argument against premium cards - only against holding one that does not fit.

Count what you used, not what was offered

Card marketing values the benefit list. You should value only the parts you consumed.

Reward value: what you actually redeemed, in rupees, not points accumulated
Lounge visits: only the ones you made, valued at what you would otherwise have spent - often close to zero
Vouchers and milestone benefits: only those you claimed before expiry
Insurance and concierge: worth zero unless you used them

The threshold trap

Benefits gated behind spending thresholds are worth nothing unless you cross the threshold naturally.

HDFC now requires Rs 60,000 quarterly spend for lounge access on Regalia Gold and Diners Club Privilege
Spending more to unlock a benefit is not saving money, it is buying the benefit at full price
If you would not have spent it anyway, the benefit costs you the difference
Count thresholds you already exceed. Ignore the ones you would have to stretch for

What to do if the answer is no

Closing is rarely the best first move, and often the worst.

Ask for a fee waiver - many issuers waive on a spend threshold you may already meet, and many will waive on request to retain a customer
Downgrade to a no-fee variant of the same card, which preserves your account age and credit limit
Closing reduces average account age and total limit, both of which can lower your score
If you do close, do it well before applying for a home loan, not during

Common questions

How do I calculate whether my credit card fee is worth paying?

Add the rupee value of rewards you actually redeemed last year to the value of benefits you genuinely used, then subtract the annual fee. Count lounge visits and vouchers only if you used them, and treat threshold-gated benefits as zero unless you cross the threshold without changing your spending.

Does closing a credit card hurt my credit score?

It can. Closing reduces your total available credit, which raises your utilisation ratio, and it eventually reduces your average account age. Asking for a fee waiver or downgrading to a no-fee variant of the same card usually preserves both.

Value what you used, not what you were offered. Then ask for a waiver before you consider a downgrade, and consider a downgrade before you consider closing.

Written by Danish Mirza, founder of Unyfy. 14 years in Indian lending and collections at Standard Chartered, Barclays, Ola Money and Uni Cards.
Last reviewed 2026-09-08.