Should You Get a Credit Card With an Annual Fee?

If you’re shopping around for a new credit card, then you’ve likely learned there are a lot of options out there. Some offer travel rewards, cash back, and other perks that may have caught your eye. But are those card worth the annual fee associated with them? Or should you look to a card with no annual fee instead?

Can You Spend Enough to Earn the Rewards?

Some rewards cards offer big beginning point bonuses if you spend a specific amount of money within a certain amount of time. For example, the Chase Sapphire Preferred card  is a popular choice because it offers a points reward for travel which comes out to the equivalent of $625. The caveat is the cardholder must spend $4,000 in the first three months to get the 50,000 points. Without that, it will be about another $25,000 before the 50,000 points are earned on the points system.

Other cards have limits and requirements when it comes to their points as well. Figure out if you can afford spending the money to get the most out of your rewards before committing to a credit card with a fee.

Will You Be Able to Maximize Your Points?

Is the fee-related credit card you’re looking at going to offer rewards you’ll actually use? Many credit cards offer travel rewards, but if you’re not a frequent flier, then these might not be as sweet of a reward for you. Instead you might look for a card that has cash back options or another reward you find more attractive.

Additionally, you’ll want to get a card that allows you to earn your points twice as fast. For example, a travel credit card may offer 2 points x $1 for travel-related purchases, and one point for $1 on other purchases. If you don’t buy things for your travels, you’ll earn these rewards much slower.

Can You Afford the Annual Fee?

One of the biggest considerations to make is if you’ll be able to afford the annual fee. Most cards will give you the first year free, so it’s easy to think, “That $100 fee will be affordable by this time next year.” If that’s your mindset, then the annual fee may be too high for you, and you don’t want to put yourself in a bad financial situation.

Fees come in all sizes, too. You may think that a $150 annual fee for a card is a lot, but consider that some cost nearly $500 a year. And while you can cancel your credit card to avoid this fee if you decide it’s too much down the road, keep in mind that will hurt your credit.


Disclosure: The information provided by The Financial Genie is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other professional to determine what may be best for your individual needs. The Financial Genie does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Additionally, some of the organizations with products on our site may pay us a referral fee or affiliate commission when you click to apply for those products.

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