Are you on the search for a new credit card? Are you wondering if it’s a good idea to pay an annual fee?
In an overall sense, only you know if you’re comfortable paying an annual fee. You have to ultimately make this decision on your own.
However, before you decide for or against this, it never hurts to take a closer look at the finer details.
Before we go any further, let’s make sure you’re familiar with what an annual fee is. This is nothing more than a fee that you pay once a year to remain a cardholder and enjoy any benefits or features associated with an active account.
Generally speaking, annual fees are most common with two types of credit cards: those for people with bad credit and rewards credit cards.
Should You Ever Pay an Annual Fee?
The one thing you need to remember is that there are credit cards both with and without an annual fee. So, if you’re not comfortable paying this fee, you don’t have to. You can simply focus your attention on cards that are free to carry.
There are times when a credit card annual fee is worth it, such as:
- When you want access to a top tier credit card: Maybe you want a travel rewards credit card that comes with bonus points and the opportunity to earn more with every dollar you spend. Yes, you’re paying an annual fee, but you may realize that you’re more than getting that money back in return.
- You’re a big spender: The more money you spend on your credit card, the more you’re in line to receive should you have a cash back or rewards credit card. Again, even if you’re paying an annual fee, compare this to what you would get in return over the course of a year.
- You travel a lot: If you’re always on the go—either for business or pleasure—a travel rewards credit card can help cut your costs. As you earn points, you can redeem them for expenses such as airfare, rental cars, and hotel stays.
This information should help you decide if it makes sense to apply for a credit card with an annual fee.
As you compare your options, keep in mind that annual fees can range from less than $100 per month to $500 per month or more.
Do you currently carry a credit card with an annual fee? Is it worth the money to you? Are you thinking about making a change to save on this fee every year?