Why Paying An Annual Fee Might Be Worth It

Sep

Why Paying An Annual Fee Might Be Worth It

Tagged Under : Annual Fee, Fee

You could think of an annual fee in the same way you would think about a membership fee. Its a fee you pay once a year and in return you get the benefits a credit card offers. Before you apply for a card that charges an annual fee you should consider if its worth if for you. If you decide that paying an annual fee just isn’t worth it there are many cards out there that don’t charge an annual fee. There are also cards that will waive the annual fee for the first year. If you don’t want to pay an annual fee you might have to give up certain incentives or rewards, but that’s not necessarily a bad thing. To help you figure out if paying an annual fee is worth it you could start with the following questions:

How much you spend on your card?
Do you pay in full every month?
Will earning reward points or cash rebates make sense for you?
Do you need to build your credit?

It might surprise you to find that a credit card that charges an annual might actually be a better fit for you. The features the card might offer could out weight the cost of the annual fee. This could be the case with a card that offers members the opportunity to earn points towards airline miles or a card that fulfills the purpose of building credit. As a way to illustrate why paying an annual fee might be worth it we will look at two types of cards: Airline Rewards Cards and Secured Credit Cards.

Airline Rewards Cards
An airline rewards credit cards certainly offers great rewards to some people. Airlines often offer frequent flier programs to encourage the loyalty of their customers. Typically, these cards charge an annual fee anywhere between $45 to $150 per year. The cards allow you to earn points for qualified purchases and cash them in for airline tickets. Often these cards offer a nice sign up bonus and many times include the ability to earn double miles when you buy an airline ticket with the card, annual miles bonuses and annual companion tickets. For people who are not frequent fliers the idea of paying an annual fee might seem a bit ridiculous. However, frequent fliest know that earning points for just making credit card purchases is a great way to earn airline tickets.
Secured Credit Cards
A secured credit card is not same as a traditional credit card. With a secured card the cardmember is required to put down a security deposit . The credit limit is usually based on the amount of the security deposit. Secured cards charge interest and they charge annual fees as well. The main reason why people get secured credit cards is because they help build credit even if you don’t have a credit history of if you have had credit problems in the past. These cards are also recommended to people who have filed bankruptcy and need to re-establish their credit. If you are someone who can benefit from a secured card then paying an annual fee can be well worth it, especially if you can’t qualify for a traditional card.

In the end you have to decide what type of card works for you and if it the card is worth paying an annual fee. Do some research before getting a credit card and don’t be afraid to compare cards with annual fees and without to find the card that best suits your needs.

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