AlexH

In this example, I will compare two cards: RBC Rewards Visa Classic and RBC Royal Bank Classic Visa II

The Rewards offers $2 = 1 point, with no annual fee, whereas the Classic offers $1 = 1 point with an annual fee of $35.

There is a certain point where if you spend enough money, the card with the annual fee will start to be worth it.  For the value of the points, I base it on the gift certificates because they seem to have the best cash value, 3000 points = $25.

Let money spent be X.  One one side of the equation you have the card with the annual fee, which we convert to ‘points’.  The other side is the same X, but is divided by 2 because we only earn 1 point for every 2 dollars spent.
X - 35*3000/25 = X/2

Solve for X: X = 35*3000*2/25.

You need to spend $8400 or more to make a card with an annual fee worthwhile.

There are a few ways to maximize this:

• Put all members of the family on the same card.
• Pay for major things like car insurance on your credit card (and pay it all off the same month).
• Pay for utilities, TV, and phone service through your credit card.
• Pay for food, gas, and everything else possible with the CC.
• When going out for dinner with a group of people, offer to put it all on your credit card and take the cash from everyone else.

And finally, if you are a student, you should definitely get the RBC Rewards Student Visa.  $1 = 1 point, with no annual fee.