Should You Get A Credit Card With An Annual Fee?

Would you use a credit card with an annual fee? If so, how much would you be willing to spend? For many people, the thought of paying a charge just to have a card seems ludicrous. In some cases, there’s no justification for getting a credit card with an annual fee. 

But, like anything, there’s always an exception. 

US News My Money explains why some credit cards have annual fees. Once you realize what you’re really paying for, you might have a change of heart.

Credit Card Annual Fees, Defined

Think about an annual fee like paying a cover to enter a venue and enjoy some live music (remember those days?). When it comes to credit cards, this charge allows you to enjoy all of the benefits associated with the card.  

Some credit card companies offer generous welcome rewards. And these bonuses aren’t cheap. To offset this cost, credit card issuers levy an annual fee. To determine if a credit card comes with a yearly fee, check under the “rates and fees” or “pricing and terms” section on the credit card company’s website.

Fees range based on the company and the card. They can be as low as $35 or as much as thousands of dollars. Of course, the latter is only for the crème de la crème, so don’t concern yourself with that. As long as your credit score is in good shape, you should have no problem qualifying for a top-notch rewards credit card that doesn’t charge an arm and a leg to use each year.

Are The Rewards That Much Better?

Cash back cards are a type of rewards credit card. You can find many cash back cards with no annual fee but still help you save big on everyday purchases. But if you have a cash back card that comes with a yearly fee, you could save even more.

Take, for example, a card that lets you earn 3% back at the supermarket. That’s a good deal, isn’t it? But if you pay an affordable annual fee, you could double your cash back to 6% and get tons of additional benefits and rewards, too.

The difference is particularly noticeable when it comes to travel and branded credit cards. You could pay an annual fee and get something like a $200 statement credit for in-flight purchases or free checked luggage for yourself and a travel companion.

These cards also offer intangible perks like priority boarding. Of course, everyone is different, so how much these intangible benefits help depends on the individual. Even so, it’s easy to see why paying a reasonable annual fee can be worthwhile, especially for frequent fliers.

When Is Paying An Annual Fee Worth It?

There are several credit cards designed for borrowers who are trying to build their credit. Many of them charge an annual fee. With secured cards, for instance, you may or may not have a yearly fee. Make sure you check before applying for a card.

Annual fees for credit cards intended for people with bad credit help lower the creditor’s financial risk. If you use a secured card to build your credit, the low annual fee is worth it. Just make sure to stay on top of your bills and maintain a low monthly balance to help your rating.

On the other hand, if you’re interested in great rewards, you need to do your research and determine whether the rewards outweigh the annual fee. If you pick a card that lets you earn rewards in categories you spend anyway, you could get many benefits. Just do your due diligence and reflect on your spending habits before going after a rewards card with an annual fee.

When shopping for a rewards credit card, keep in mind that most come with steep interest rates than other types of cards. Credit card issuers know that some customers will maintain a monthly balance and accrue interest, so it’s one more way for them to profit.

If you don’t think you can pay your balance off in full every month, don’t get a card with an annual fee. Between the fee and interest payments, you won’t get any reward from it, and you’ll only end up losing money.


  • Harzog, Beverly. “Why Some Credit Cards Have Annual Fees.” U.S. News & World Report, U.S. News & World Report, 30 Sept. 2020,
Ian Schindler