Is It Worth It to Pay a Fee to Use Certain Credit Cards?

Cole Mayer  | 

While most people will want a credit card with no annual fee, there are some cards — usually premium cards — that have benefits worth the annual fee. However, these fees also tend to be costly, some more than $450 each year. Are those worth the extra cost? And what about non-premium cards? What do you get in exchange? Let’s take a look at annual fees and see if these credit cards are right for you.

Why Credit Cards With Annual Fees Are Worth It

You Don’t Qualify For No-Fee Cards

If cards with annual fees are the only ones you qualify for, then by default it’s worth it. Having a card is better than no card, as it will help you rebuild credit, especially with a secured credit card, which often come with a small annual fee.

Secured credit cards are perfect for repairing your credit, as your activity is reported to the three credit bureaus. Secured credit cards may also come with rewards, but the bigger draw is repairing your credit score.

You Spend Enough to Earn Points

One of the major benefits to cards with annual fees is often the ability to earn points, miles or cash back. Some cards may provide more points for shopping at a specific retailer — user the card lender — or at a certain type of retailer, like a grocery store.

If you spend enough money to earn points, it could result in free purchases or essentially a small refund of money that offsets the amount you pay in fees.

For example, if your card carries a $100 fee, but unlimited 5 percent cash back at the grocery store, and you spend $10,000 in groceries in a year, you receive $500 back — netting a reward of $400 after the fee. The fee essentially pays for itself.

The Benefits Outpace the Fee

Premium credit cards have an annual fee much higher than the typical card. While annual fees for regular cards tend to be in the $50 to $100 range, premium cards can have fees closer to $450. However, some of the premium benefits are more than worth it.

For example, a $450 fee on a travel card might come with a sign-up bonus worth $750 in travel rewards, an annual $300 travel credit, reimbursement for TSA Precheck, access to priority travel lounges, complimentary rental car and travel insurance on every related purchase, and still earn points based on every dollar you charge.  

Other cards might include Uber credits or free fourth nights in hotels. For frequent travelers, whether for business or pleasure, the benefits can far outweigh the fee.

Why It’s Not Worth It to Pay Credit Card Fees

Lackluster Benefits

If you are paying an annual fee for a card that only gives you car rental insurance and price protection, your “premium benefits” aren’t worth the fee. There are plenty of credit cards with zero annual fee that provide the same benefits. Considering closing or changing these cards to a different product (especially with the same lender, as this will not count against your average age of accounts; lenders usually consider a changed product card the same account). If you are going to pay for access to benefits, make it worth your money.

You Aren’t Using the Benefits

If your card gives the most reward points for a store you rarely shop at, it’s time to consider closing the account. If you haven’t been able to travel recently, and don’t have plans to travel any time soon, those reward miles are going to waste. If you aren’t actively using the benefits you are paying for, then there is no reason to shell out an annual fee for a premium card.

You Have Too Many Cards

While having multiple cards can sometimes help your credit score through utilization percentage and average age of accounts, if the cards have annual fees, you are probably hurting your wallet. You may have too many credit cards. If you are utilizing all of them for their benefits, such as if you are churning, then having the cards may be useful — especially if you can get some fees waived for the first year. Otherwise, chances are, having multiple cards with high fees is not going to be worth the effort of trying to take advantage of each card’s benefits.

Is Paying An Annual Credit Card Fee Worth It?

In the end, whether the fee is worth the benefits comes down to your particular situation. If you travel a lot, then the fee could be worth it. If you don’t go shopping often, points may not sweeten the deal at all. The annual fee investment can pay off, but only in the right circumstances — something that will only make sense to you.


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Cole Mayer is an online marketing specialist and corporate blog writer. A former newspaper journalist, he spends his free time freelance writing, playing video games, and learning about every subject under the sun. Follow Cole on Twitter: @ColeMayer42

This post was updated August 22, 2017. It was originally published August 25, 2017.