Is the Annual fee credit card worth it?


Annual fee credit cards are the credit cards that make you pay your balance fee, once a year, every year. Having a card such as this can be advantageous, as it comes with many benefits and rewards. But, it can also be a nightmare for people who hate the very concept of a looming debt.

But still, annual fee credit cards can be very helpful tools for many kinds of people, and the surmounting and stacking balance is still worth it for these kinds of people. And if you want to find out if you are one of them, so check out these points below. And let us hope this is able to fulfill all your doubts.

If you travel often

Image courtesy:Pixabay
Image courtesy:Pixabay

If you are a frequent flyer, and due to business, you have to spend a lot of time going from one country to another. Your life often happens in various hotel rooms of the world, and no one trip is like the other. This kind of situation is where having an annual fee credit card will be worth it.

Many airlines and hotels have partnered with quite a many banks to give their branded credit cards that give many perks to their holders. You might receive priority access to the business lounge, VIP boarding, checked baggage fee waiver, etc. While on the other hand, the hotels might gift you with room upgrades, free breakfasts, and late checkouts.

But not just that, having a hotel or airline annual fee credit card might also get you many cash back options on you every travel. So, if you are a frequent traveler then you should check this credit card out.

If you are comfortable with debt

Image courtesy:Flickr
Image courtesy:Flickr

As mentioned earlier, the idea of a rising interest on your credit card balance can stack up your debt dramatically. And so, many people choose to pay their full credit card balance every single month, because this is the best way for them to keep the rising debt at bay.

But if you are someone who has no problem with the stacking up of the debt and the rising compound interest, then having an annual fee credit card is actually beneficial for you. This is because more annual fee credit cards provide less interest than their monthly counterparts. They provide you with better points; cash back offers, and heavier discounts.  Using an annual fee credit card will help you use your finances in a better way, and will save you from cards of high APR.

If your monthly expenditure is parallel to the reward offers

You spend around the similar amount of money to buy things that run your lifestyle every month. But if you use a monthly fee credit card, then you might have realized that you do not actually get enough rewards by your credit in comparison to the awards that the annual fee credit card holders enjoy.

While it is certainly true that the annual fee credit card providers certainly do give a higher amount of rewards to their patrons. But that does not mean that it be better than the current condition you are in. If say, you pay all your credit balance every month, and even your current reward system rewards you with surplus rewards even with all your expenditure, then you are in a supposed benefit.

Image courtesy: Pixabay
Image courtesy: Pixabay

But, if you decide to change to an annual fee credit card, then you will have to pay a surplus stacking interest. This interest will come with the rewards, but if the rewards’ amount does not surpass the interests and your expenditure, then you are in loss.  When that happens, the whole purpose of getting an annual fee credit card is defeated.

So, you must take it into account that how much of a profit it is for you to get an annual fee credit card. And you must make that calculation before you even choose to get an annual fee credit card. Moreover, there are many annual fee credit cards that reduce the interest and give no rewards, so as to have a better annual rate of balance. Still, this situation will defeat your purpose if you still want a card that gets you more rewards and cash back offers.

We hope this information has helped you understand if the annual fee credit card is good for you. To summarize the points, it would be easy to say that the annual fee credit card is worth it for those who:

  • Do not have a problem with stacking debt and can pay off the whole balance in a single go, every year.
  • It will benefit the most to the frequent travelers to get an airline or hotel card.
  • The amount of rewards you get along with your interest should be less than the surplus you get with your current plan.