Paying a 2.5% card fee to earn points only makes sense when the points you earn are worth more than 2.5 cents for each dollar you charge. With most business cards and a fair point value of about 1.5 cents, you lose a little money or just break even. Pay by card where there is no fee, and pay by bank transfer where there is one, unless your card earns a lot on that bill.
How do you work out the break even point?
Multiply the points you earn per dollar by what each point is worth. If the answer is above 2.5 cents, the card wins. If it is below, the fee wins.
Here is the simple rule. The fee costs you 2.5 cents on every dollar. The points pay you back your earn rate times your point value. So the break even point value is 2.5 cents divided by your earn rate.
- Earn 1 point per dollar: you need 2.5 cents per point to break even.
- Earn 1.5 points per dollar: you need about 1.67 cents per point.
- Earn 2 points per dollar: you need 1.25 cents per point.
Now look at it from the other side. If you value your points at 1.5 cents, you need to earn about 1.67 points per dollar to break even on a 2.5% fee. Anything less, and you are paying for your points.
A worked example helps. Say you pay a supplier $10,000 a month and they add 2.5%. That is $250 in fees.
- At 2 points per dollar you earn 20,000 points. At 1 cent each, that is $200. You lose $50.
- Same 20,000 points at 1.5 cents is $300. You gain $50.
- Same 20,000 points at 2 cents is $400. You gain $150.
- At 1 point per dollar you earn 10,000 points. Even at 2 cents each, that is $200. You lose $50.
So the answer depends on two things you control: which card you use and how you spend the points.
Where does the point value come from?
This guide assumes 1.5 cents per point. That is a fair, careful value for flexible points like American Express Membership Rewards or Chase Ultimate Rewards when you move them to an airline and book business class.
You do not have to trust that number. You can work out your own. Take the cash price of a seat, subtract the taxes and fees you still pay on the award, and divide by the points it costs.
For example, a business class seat to Europe costs $4,000 in cash. The award costs 70,000 points plus $150 in taxes. That is $3,850 divided by 70,000 points, which is 5.5 cents per point. Good business class bookings often land well above 1.5 cents.
The low end matters too. If you cash points out as a statement credit, you often get about 1 cent each, sometimes less. Check the program's own page for the current rate. At that value, a 2.5% fee almost always loses.
So be honest with yourself. If you really do book business class with your points, a higher value is fair. If your points sit unused or turn into cash back, use 1 cent.
When does paying by card lose money?
Paying a 2.5% fee loses money when your points are worth less than about 1.5 cents each on a typical business card. That is the plain line.
It also loses money in these cases:
- Your card earns only 1 point per dollar on that kind of bill.
- You carry a balance. Interest wipes out any points gain fast.
- You never redeem, so the points are worth nothing to you.
- Your points expire or your card has an annual fee you would not pay otherwise.
If any of these is true, pay the supplier by bank transfer or cheque and save the 2.5%.
Which business costs usually have no card fee?
Many of your biggest bills can go on a card with no fee at all. That is where points are pure gain.
Costs that usually take cards with no surcharge:
- Online advertising, like Google and Meta ads
- Software and cloud subscriptions
- Shipping and courier accounts
- Phone and internet
- Office supplies and equipment from large retailers
- Business travel, hotels and airfare
These vendors tend to absorb the card cost because nearly every customer pays by card. Put them all on your best earning card first.
The bills that tend to carry a fee are trade suppliers, wholesalers, contractors, and some government and tax payments. Third party bill pay services that let you charge almost anything also add their own fee. Check their site for the current rate, then run the same math.
Surcharge rules also differ by place. Quebec does not allow them, and some US states limit them. If a supplier adds a fee, it is fair to ask whether it is allowed, or to ask them to drop it. Many will, for a steady customer.
What else can tip the math?
A few things can make a fee worth paying for a short time.
The biggest one is a welcome bonus. New cards often give a large bonus after you spend a set amount in the first few months. If a fee bill helps you reach that amount, the bonus can more than cover the fee. Bonuses change often, so check the card issuer's own page for the current offer and spending rule.
Cash flow is another. A card gives you weeks before payment is due. If you pay in full every month, that float has real value to some businesses.
Card bonus categories also matter. If a card earns extra on a category your supplier falls into, your earn rate rises and the break even point drops. For a full plan on how to split spend across cards, see our guide Best Card Setup for $25,000 a Month of Business Spend.
The short version: put every no fee bill on your card, pay fee bills by bank unless the math says yes, and spend your points on business class, where they are worth the most.
If you run a business, you may already spend enough to fly business class more than you think. You can see what your spending buys in a few minutes.