Credit cards with annual fees aren’t exactly the financial pariahs that some make them out to be. Sure, nobody wants to pay an extra fee if they don’t have to, but did you know that a handful of cards with annual fees stack up as some of the very best on the market today?
Many annual fee cards include lucrative rewards programs, VIP travel status and an excellent return on your “investment” – your annual fee. Consider your annual fee the cost you pay for enjoying some of the best credit card perks available, and in many cases the rewards accompanying your card – whether it’s cash back or even credit repair – pay back that annual fee and then some each year.
So to answer the first question, yes; there are some great credit cards with annual fees worth paying, depending on the kind of card you’re interested in.
That said, not all credit cards with annual fees are created equal, and if you think you’re willing to shell out a little dough each year in return for an excellent credit card then there are some things to consider first.
What am I getting in return for my annual fee?
This question is pretty simple, but it’s worth taking the time to consider and map out.
For example, maybe you’ve been traveling a lot of late and you’re hoping to cash in on all that road work with some free miles. There are essentially two types of travel rewards credit cards to choose from – the general rewards card and the co-airline branded miles credit card.
While there’s no steadfast rule of thumb, in general the co-branded airline miles card is the one that charges the annual fee. This is because the co-branded cards offer members-only perks that can include boarding privileges, discounts on airfare, access to those exclusive airport lounges and more.
So if you’re already spending an inordinate amount of time on one airline, it’s probably worth researching what types of credit card member rewards programs they’re offering. If you have no airline preference and would prefer a lack of flight restrictions in place of the co-branded perks, then perhaps a travel rewards card is more up your alley.
Either way, be sure to consider what exactly you’re getting out of your annual fee credit card.
Is the annual fee waived the first year?
Many of the aforementioned airline miles credit cards with annual fees will actually waive that fee during your first year of membership; consider this a sign-up bonus for your new-found loyalty.
Waiving the annual fee in the first year provides members with an immediate incentive to sign up, and it also works as a sort of trial run with your new card. This way, you can get a feel for the perks attached to your annual fee card before having to actually pay the fee.
Just remember that eventually you will have to pay up for your membership, and it’s rarely – if ever – a good idea to close a credit account. So once you receive your annual fee card, it’s yours for good. Keep that in mind.
Besides rewards, what other benefits do annual fee credit cards offer?
Finally, not all credit cards have annual fees simply to “pay for” the rewards. A number of bad credit credit cards include an annual fee, which is essentially the price one pays to begin repairing their poor credit.
There are secured and unsecured credit cards with annual fees that can act as credit-building tools for consumers with bad-to-middling credit. With these cards, the annual fees are generally low and the return on investment pretty high since lower interest rates with an improved credit score can save one hundreds and even thousands of dollars over the course of a lifetime.
So, credit cards with annual fees can be rewarding in more ways than one. If you’re looking for the ultimate in cash back and miles, then consider an annual fee card that’s right for your needs and your budget. When used correctly, these cards can back the annual fee and then some over the course of the year.
This guest post was written by Jason Bushey. Jason is a full-time personal finance blogger, and he runs the consumer comparison and credit repair website Creditnet.com.