October 26, 2023
Explore the pros and cons of getting a credit card with annual fees and learn whether or not it’s worth it for you.
Go to any credit card issuer website and you’ll see that there are all sorts of card options out there — each with its own benefits, rewards, and features. And if you’re in the market for a new card, it’s important to consider these details to ensure you get the right card.
Another thing to factor in when deciding which card you want? Whether it comes with an annual fee or not.
A credit card annual fee is exactly what it sounds like: it’s a fee that’s charged annually for as long as the card remains open. The fee is essentially the cover charge for the ability to use that card and the valuable benefits that come along with it. Fees differ from issuer to issuer, but typically range from $39 to $99 — and even thousands of dollars per year for some ultra-premium cards.
The exact date can vary, but most credit card companies charge your annual fee during the first statement period and then every 12 months after that. So you can generally expect it around the same time every year. However, some issuers may split the fee into equal monthly installments throughout the year.
When it’s time to pay your annual fee, you do so the same way you pay for purchases and other transactions on your monthly statement.
Not every credit card has an annual fee. So if you’ve found a card that fits your needs and it doesn’t have an annual fee … good on you! At the same time — and while it can seem a little backward to spend money in order to have the opportunity to spend more money — sometimes that annual fee can be worth it in the long run.
In other words, there are pros and cons to having a credit card sans fee.
For example, say you had a 5% cash back rewards card with a $95 annual fee. If you spent $2,000 on eligible purchases per year (5% of $2,000 = $100), you’d be earning more cash back rewards than your fee. After that, the rest is just gravy.
Yes … sometimes.
First things first, your account needs to be in good standing. And this isn’t just an “annual fee waived” thing … this is an always thing. Responsible use and timely payments go a long way in bumping that credit score of yours in the right direction. As a bonus, a higher credit score is a good bargaining chip in your quest to get your fee waived.
The next step may sound obviously simple, but it’s worth the effort to call your card issuer and ask them to waive the fee. The worst thing that can happen is they say no. Another option, if approved by the issuer, is to switch to a different card with no fee. But be aware that, by doing so, you may also be losing some card benefits in the process. There are also instances where a credit issuer may grant you a one-time fee waiver.
The moral of the story is you’ll never know until you ask. And, while it shouldn’t have to be said, always be respectful with the person on the other end of that phone call. After all, you're asking them to do you a favor, and you always attract more flies with honey than vinegar.
In the grand scheme of things, choosing a credit card should be all about what works for your needs, your finances, and your goals. If you’re deciding between a card with a fee and one without, weigh the pros and cons, read the details, and choose the one that makes the most sense for you.
Looking to add a credit card to your wallet? See if you Pre-Qualify for a Credit One Bank card today, with no impact to your credit score.
With his eyes set on becoming the next great ad man (at least until his comedy writing career took off), Marc earned his journalism degree and went straight into advertising for various gaming and tourism clients. He later expanded his credentials to include public affairs and communications work for several environmental science organizations before returning to his marketing roots. A lifelong scholar with recent studies in strategic communication, Marc enjoys tying humor into his writing and simplifying complex financial subjects into engaging and easy-to-digest content for a wide variety of audiences.
This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.
Nobody likes fees. Check that. Nobody likes paying fees. Businesses that charge fees like them because they help offset the costs of doing business and hopefully contribute toward a business’ bottom line.
It can be convenient to pull a credit card out of your wallet and use it to pay for anything from groceries to your dream vacation. But that piece of plastic could end up costing you more than you bargained for.