Are Credit Cards with Annual Fees Worth the Cost?

26 September 19

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Annual fees can be anywhere between $39 to even a whopping $450 or higher, and when you think about the amount of cards that don’t have any sort of annual fee, it may not make sense as to why you’d ever want to pay a fee that you don’t have to. So the question is, why would anyone ever choose a credit card that comes with an annual payday loan fee over one that doesn’t?


The answer to this question is rewards, rewards, and more rewards. A credit card that includes an annual fee will almost certainly be a rewards card. However, understand that not all rewards cards have an annual fee, however those that do usually include much larger rewards with high miles, cash-back, and point incentives. Many annual fee credit cards include tempting and exclusive benefits that give members access to airport lounges and an array of other perks such as free airline passes, complimentary concierge services, hotel upgrades, discounted car and hotel rental rates, reservation guarantees, first-class upgrades, priority boarding and much more. The more generous that the rewards are, the more tempting they will be. However, don’t let that fool you, as credit cards with annual fees are not for everyone.

When Credit Cards with Annual Fees are Not a Good Idea

If you are the type of consumer that tends to carry a balance on your credit card each month then a credit card that includes an annual fee will most likely not be the best financial decision for your situation. This is because along with the annual fees, reward cards often tend to have substantially higher interest rates. These interest charges may wipe out all of the reward incentives that would make the annual fee worth the heightened expense.

When Annual Fee Credit Cards Make Financial Sense

Credit cards that come with annual fees aren’t always a bad idea. For the right type of person, a credit card with an annual fee could actually be well worth the fee and could in fact be a great deal. If you pay your credit card balance every month, and charge more than $10,000 to $15,000 every year on your credit cards, or are a frequent traveler then paying an annual fee may make financial sense for your personal situation.

Make Sure to Earn the Right Types of Rewards for Your Situation

To make sure that paying an annual fee on a credit card is worthwhile, the benefits that you will be receiving must fit with your lifestyle. For instance, if you charge your credit card with thousands of dollars worth of purchases but rarely make any trips, a rewards card that offers your free airline tickets probably won’t be your best bet. However, a credit card that offers three to six percent cash back on purchases without limit may make the annual fee completely worthwhile.

Compare Credit Cards for the Best Deal

One of the most important things to do when choosing an annual fee credit card is to make sure to shop and compare multiple credit card offers to ensure that you will receive the best deal. It’s also crucial that you pay very close attention to the introductory terms of any credit card that you are considering. Many annual fee credit cards will waive their fees for the first couple of months or even year in order to make their deal more enticing. However, after that year, hefty fees may start to kick in.

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