Question 1

What's a credit card annual fee?

Accepted Answer

A credit card annual fee is an annual membership fee that your credit card issuer might charge you each year to open and maintain your credit card account. Your annual fee is the cost of accessing certain credit card benefits or services. Typically, credit cards with annual fees are rewards credit cards that offer cash back, points, or miles. Premium credit cards with annual fees might offer a high rewards rate for a variety of eligible purchases, travel perks like room upgrades, or premium benefits like access to airport lounges. Credit card issuers may add the annual fee to your balance each year around the anniversary of your account opening, depending on their fee schedule. Some credit card issuers provide a fee waiver for your first calendar year of card membership, so you wouldn't start paying until year two. Annual credit card fees may range from tens to hundreds of dollars, depending on your card issuer and the features your credit card offers. A card with a higher annual fee may offer more rewards or features than a card with a lower fee, but that's not always the case.

Question 2

Do all credit cards have an annual fee?

Accepted Answer

No, not all credit cards have annual fees. Credit card companies offer various types of credit cards without annual fees, including rewards credit cards.

Question 3

Can a credit card annual fee change?

Accepted Answer

Yes, annual fees for credit cards may change. Your credit card company might increase your credit card's annual fee. A credit card's benefits may change, too. So, if you already have a credit card with an annual fee, you may want to review your card usage and rewards periodically to decide whether it's still worthwhile.

Question 4

Is a credit card annual fee worth it?

Accepted Answer

Whether an annual-fee credit card is worth the extra expense depends on your priorities, the value of the benefits, and your budget. Paying an annual fee for a credit card may make sense if the membership rewards and benefits you receive are worth more than the yearly cost. Before you apply for an annual-fee credit card, try to break down your potential rewards earnings and the value of the card's perks. Be realistic about your spending habits and how they align with bonus categories. If an annual-fee card earns extra cash back on travel purchases but you only take a trip every few years, for example, then the travel rewards may not be worth the extra cost. A card without an annual fee that offers rewards on each purchase from grocery stores or gas stations may be a better fit.

Credit Card Annual Fees

Key Takeaways

Did you know?

APR vs. Interest Rate

What is a Purchase APR?

What Is Accrued Interest on Credit Cards?

How to Lower Your Credit Card Interest Rate