3 Times When Paying Annual Credit Card Fees Actually Makes Sense

Written By Mary Beth Eastman
Last updated October 12, 2018

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October 12, 2018

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Most people tend to shun credit cards with annual fees. After all, why pay these yearly fees when there are so many credit cards with zero annual fees? Similarly, if you are aiming for financial freedom and independence, you will surely fare better with cards that don’t assess charges just to have them. However, there are instances where paying annual  fees on the top credit cards actually make sense. Here are some reasons to keep your cards with these yearly charges.

From Chase to Bank of America, credit cards are offering rewards for new and seasoned cardholders. In fact, you can earn redeemable points on gas, food, entertainment, and even retail purchases. These points must reach a certain number before you can redeem them for cash, gift cards, or checks. With this in mind, if you have rewards cards that pay out more rewards than the annual fees, it’s best to keep these cards. These cards allow you to turn on rewards with just one click, and there are always new vendors and stores being added each day. Learn more about picking the right card for you.

You can even get bonuses just for signing up with an annual-fee credit card. While you should always check what the yearly fees are first, these credit card bonuses tend to outweigh these charges each and every time. No truer is this than within the first year, which gives you ample time and flexibility to amass points and benefits. Here are some things to keep in mind:

· With an annual-fee card, you must look at your spending patterns. Will you be spending enough to earn these monthly, quarterly, or year-end benefits?

· You also need to see which vendors are part of the card’s benefits and points plan. Will you frequent these establishments?

· Many annual-fee cards also offer miles for users that tend to travel a lot. Similarly, you can redeem points to go towards your outstanding balance, as well check which type of point currency your card uses for customers.

You can also get potential savings on everyday use with your annual-fee card. This mainly revolves around essentials, including food, gas and groceries. For example: charging $1,000 a month at 2 points per $1 can amount to 24,000 points annually. When redeemed, this is $240 that you have earned within one year. If you have an annual fee of $49, you have amassed $191 in profit. This essentially helps you save money on monthly purchases, while earning points than convert to cash in your pocket each month or year.

With this in mind, you may want to keep your annual-fee based cards if the rewards are worth it. They can be among the top credit cards to have. However, it all depends on the credit card you have, along with how many points and benefits they offer for users on a monthly basis.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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