Credit
November 21, 2018

3 Things To Remember About Credit Card Annual Fees

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Some credit cards charge an annual fee for using their services. The fees can vary anywhere from $25 to $500 per year. In some cases, paying an annual fee makes sense. Before you decide whether you want to accept a card that charges an annual fee, you should think about these three considerations.

Don’t automatically dismiss credit cards because they charge annual fees. Some of the cards give you great deals that make it worth paying the fee. Other credit cards, however, don’t give you much in return.

When determining whether a credit card fee is worth paying, figure out whether you will save more money than the fee costs. For example, a card that charges a $25 annual fee makes sense when it helps you earn $300 in travel rewards. In fact, the best travel rewards cards offer perks and bonuses that add up to big discounts on flights.

If you don’t get a good return on your fee, though, you should look for a different card that gives you more perks or doesn’t charge an annual fee.

Credit card companies offer a variety of perks and rewards to make their annual fees worth paying. Some cards will even get you access to luxury lounges while you travel.

Not all of the perks and rewards offered by credit cards will apply to your life, though. If you don’t travel often, then you won’t have many chances to take advantage of the airport’s luxury lounge.

Similarly, if you don’t spend a lot of money on clothing, then it probably doesn’t make sense to use a credit card that gives you cash back when you buy clothes at certain stores.

Before you accept a credit card offer, think about whether you will use the perks and rewards that you pay for.

Paying an annual fee could mean that you qualify for a lower interest rate. That’s great if you typically carry a balance on your account. The lower your interest rate is, the less you have to pay your credit card provider.

Don’t let rewards encourage you to use your credit card irresponsibly, though. Rewards like lower interest rates and cash back are only good deals when you carry a small balance. If you carry a high balance, then you will end up spending a lot of money on interest.

Using your credit card irresponsibly can also lead to additional fees. Missing a payment, for instance, can mean that you pay an extra fee. Your credit card company may even raise your interest rate after you miss a payment.

Credit card annual fees have pros and cons. It all depends on which card you choose and how you use it. Compare all of your options so you can focus on the ones that will benefit you most. Finally, make sure you use credit responsibly so you can pay your credit card provider as little as possible while enjoying the perks.

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