Annual Fees: Ask These Questions Before Getting a New Credit Card

Published January 7, 2013 by

There are countless credit cards potentially available to you, but not every credit card that is available on the market has an annual fee. When trying to decide whether or not to get a credit card that has an annual fee, you need to consider a number of things. Can you afford the fee? Are the rewards that likely come with the card worth it? Before signing on the dotted line, you should weigh the pros and cons of a card that comes with an annual fee.

What Is An Annual Fee?

An annual fee is a charge that you must pay once a year in order to maintain possession of a credit card account. Depending on the credit card and the services or rewards being offered, this annual fee can vary greatly. Sometimes, the fee can be as little as $15 a year. Other times, credit cards can have an annual fee of a couple hundred dollars or more.

Some credit cards make you pay their annual fee in a lump sum once a year. It is often just tacked on to one of your monthly bills. Other credit cards will distribute the fee throughout the year, often on a monthly basis but in some cases quarterly.

Is It Worth It?

One of the most important questions to ask yourself when considering a credit card with an annual fee is simply, is it worth it? Is the fee worth whatever rewards you are getting?

For instance, if you do a lot of traveling, a credit card that offers hotel rewards, rental cars or even airline miles might be something that can greatly benefit you. But look closely at the fine print. Are there blackout dates? Do the rewards expire? How much is the annual fee? Can you only use the rewards at certain businesses? Are the rewards transferable to a family member? The answers to these questions could very well determine whether the card is right for you.

You should also consider how much you will actually use your credit card. Will you be using it enough to earn rewards or points? And if so, will you earn enough rewards or points to justify the annual fee you pay?

Don’t Be Afraid To Shop Around 

Chances are, there are hundreds of different credit cards available out there for you, both with and without annual fees. Do some shopping around to consider the right card for you. Many websites have all of the fine print on credit card offers available for you to read and research. If you have any questions at all, many credit cards have toll-free numbers with customer service associates available 24 hours a day. Feel free to give any credit card issuer a call and inquire about the services it offers and what fees it charges.

The customer service representatives for these card issuers are the experts on their companies’ products and will be able to tell you the ins and outs of what their credit cards can offer you. If you don’t like what you are hearing, or don’t completely understand, remember that you are in no way obligated to accept an offer from them.

Also, remember that if you are already dealing with credit card debt, another card might not be your best option, as it could end up worsening your debt situation and hurting your credit score.