What Is an Annual Credit Card Fee For? | St. Johns Bank
If you are in the market for a new credit card, you are likely well aware of how many options there are out there. The world of credit cards has gotten competitive, so the major players in the industry offer a plethora of perks to entice new customers—but often, these perks do not come free.
Many credit cards that have great benefits also have an annual fee that customers must pay, which will be charged in a lump sum on one statement a year. This fee certainly offsets some of the advertised perks, but in some cases, the card may still be beneficial if it offers bonuses that align with your lifestyle.
Why Do Credit Cards Charge an Annual Fee?
Traditionally, credit card companies have primarily made revenue from the interest that they charge customers who do not pay their bill in full each month. However, the perks that they offer, such as cash back, airplane lounge access and free membership subscriptions, all cost money—so the annual fee was introduced to help offset some of this cost for the company.
How Much are Annual Credit Card Fees?
The price of an annual credit card fee will depend heavily on the card. Some are as low as $35, while others are as high as $700, but the perks are often commiserate with the cost.
Typically, cards with a higher fee will have ample bonuses, such as travel credits, higher rates for earning points and other free perks. Now, deciding whether these perks are worth the cost is the ticket, because it is easy to get caught up in what is offered without considering what perks you actually use.
When Is a Credit Card With an Annual Fee Worth It?
Determining if a credit card’s annual fee is worth it for you is a personal thing, and it is important to consider all angles. Maybe you will be earning more cash back, but will you be earning enough to offset the annual fee and then some?
The same goes for travel perks like lounge access that do not have a monetary value—these perks may be worth it if you travel often, but if your home airport does not have the lounge in question, it would be a perk you could likely skip the cost of!
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