When should I pay credit card surcharge? How do I calculate this?


I have read the article on ‘Here’s how and why I value my rewards points’ but I’m afraid I still am getting a bit lost. My main concern is more of the ‘earn cost’ and would appreciate some help.

I have 2 Amex cards, one is the old Amex Plat Reserve card (on the flexible points program) which earns the following :
a. 3 points per $1 spent at restaurants in Australia
b. 2 points per $1 when you spend on travel and currency purchases
c. 1 point per $1 spent elsewhere excluding utilities, insurance (except insurances offered by American Express), telecommunications providers and government bodies in Australia where you will earn 0.5 points

My other card is the NAB Amex Plat card (earns direct to Velocity) which earns 1.5 points per $1 spent everywhere.

I recently paid for a hotel stay where there was a surcharge of 3% but would have earned me 3 points/$1. Did I pay too much for that ? So basically want to know if there is a simple formula to calculate how much surcharge I am willing to pay depending on the earn points.

Hi aswang,

Let us use your hotel stay and 3% surcharge as an example.

For your Amex card, you could earn 2 MR points per $ (because of travel multiplier of 2). The 3% surcharge equates to 3 cents per $.

2 MR points : $ spent : 3 cents surcharge

3 cents spent : 2 MR points = 1.5c per point

Using Keith’s max value of AMEX point of 2cpp, you should still pay using this card (because it is cheaper than the dearest price you are willing to pay) if the price you are willing to pay for AMEX point matches Keith’s.

1.5cpp < 2cpp (Keith’s value of AMEX)

For your NAB card, you could earn 1.5 velocity points per $. The 3% surcharge equates to 3 cents per $.

1.5 vel points : $ spent : 3 cents surcharge

3 cents spent : 1.5 vel points = 2c per point

Using Keith’s max value of vel point of 1.2cpp, you should NOT pay using this card (because it is higher than the dearest price you are willing to pay) if the price you are willing to pay for vel point matches Keith’s.

2cpp > 1.2cpp (Keith’s value of vel points)

Hope that clarifies things for you.

When you should pay the surcharge all depends on the use you have in mind for your points. The different ways that you use points (e.g. certain flights vs redeeming for gift cards vs redeeming for hotels etc.) provide different value for your points.

It’s a complicated business, but you just need to look at what the award you’re going for is worth both in points and in dollars. From that you can equate roughly what your points are worth in terms of cents, and you can then from that work out if the extra dollars you’ll pay for the surcharge will equate to points which are worth more or less than the surcharge you’re paying.

Hope that’s not too confusing!

Hi w-hiew,  thanks  for this, very helpful especially with examples. Now at least I can gauge when to use which card especially when there is a surcharge.

Jimmy, thanks as well. I plan to use my points for a travel redemption in Business class  as from what I have been reading, that is where you get the biggest bang for your money (except probably First class).


There is one additional argument in the equation;

Amex plat are reward points and can be transferred to many airlines and don’t expire.

the Nab Amex points go straight to Velocity and are only to be used in the Velocity group, I haven’t checked their expiry, which could even be an extra argument.