HomeBlogUncategorizedIs My Annual Fee Worth It? It Just Might Be, But That Doesn’t Mean You Have To Like It.


Is My Annual Fee Worth It? It Just Might Be, But That Doesn’t Mean You Have To Like It.

by / 0 Comments / Mar 18, 2015

Is an annual fee worth it? There was a time when I would have scoffed at all annual fees. Why pay a creditor for the privilege of putting their card in my pocket? What nonsense! Besides, aren’t they charged to people with damaged credit, for whom the amount is a slap on the wrist for being bad? The answer to that is “sometimes”.

It is true that sub-prime cards are available to those who have had problems with getting into debt or delinquent payments, and in those cases the issuers will add on a punitive fee. Typically there are few rewards for use, and instead the money goes toward the creditors own sense of security.

However, the fees on high-end cards are similar to VIP admission charges. So, is an annual fee worth it? If it gives you enough privilege. Sure, you are out some cash, but what you gain in ex-change can be well worth the price. To understand if annual fees are worth it, understand how they work.

Annual fees range dramatically, from less than $50 to $500 and beyond. Always carefully read the rewards program that comes with these fees. You will want to know exactly what you get for the expense, and calculate its worth to you. Do you love airport lounges and make use of them whenever you travel the globe? You know that access (if you can even get in) is around $50 per day. Ten visits per year and you’ll break even for the card that charges the top price – and that’s just for that one service.

The deals you get on car rentals and hotel rooms can also be simply deducted from the price. Save $100 per day on the combination of those two and you’ll make money with the fee in less than a week.

So, are annual fees worth it for a credit card – maybe. But you still hate it. Okay, you really want all the good stuff and you want to reduce the membership fee too. I get that. Here’s what you can do.

  • Is an annual fee worth it? Not if you can renegotiate out of it. Never be afraid to pick up the phone and ask for what you want. Perhaps the fee doesn’t kick in until your second year with the card, but you would really rather it be waived. Ask. They can only say no. But don’t stop there – maybe they have to charge it, but are willing to give you extra airlines miles to make up for the cost. Stay on the phone, be nice, and cover all possibilities. If you’re a good customer, chances are they want to both retain you, so are willing to be flexible.
  • You may be able to downgrade. Creditors typically offer a variety of cards with different membership fees. If you have one that is too rich for your blood, ask if you can downgrade to one of their products that is similar, but not quite so costly or even free. A $95 fee may be within your budget, and it may provide many of the rewards associated with a card that costs ten times as much. Again, get on the phone and ask the company’s representative what you can do to remain a customer while also getting the most bang for your buck.

Is annual fee worth it? No longer will I say “no way” to all, because I have enjoyed their benefits on multiple cards. Now it’s your turn to decide,is an annual fee worth it on a credit card.

About the Author

Erica Sandberg is a renowned personal finance editor, advice columnist, and reporter. She hosts her own video program, Making it with Erica, and is a frequent guest on national news shows, from Fox to CNN. Her book, Expecting Money: The Essential Financial Plan for New and Growing Families was the first to address the specific financial needs of new parents. Erica is the spokesperson for some of the finest businesses and products in the U.S., including Western Union, the Better Business Bureau, Bank of America, CVS Pharmacy, Michael Minna Restaurant Group, Bounty paper towels, Chase Card Services, and Assurant Solutions. Prior to her her current journalism career Erica was affiliated with Consumer Credit Counseling Service of San Francisco for ten years.

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