It’s understandable if you’re initially put off by a credit card with an annual fee. Before you completely write them off, though, consider this: the best perks and rewards programs are usually offered with annual-fee credit cards. And if you utilize the card and its perks enough, the annual fee is often easy to offset.
Most of the time, annual-fee credit cards come with perks that far outweigh the cost of the card. Airport lounge access, TSA PreCheck® and Global Entry application reimbursement, mega welcome bonuses, and cell phone protection are just a few examples. On an ongoing basis, though, the rewards that these cards earn are usually far superior to no-annual-fee credit cards. And it’s those rewards that will help you offset the cost of the card year after year.
Taking into consideration the bonuses, ongoing rewards, travel perks, and ease of offsetting the cost of the card, we’ve compiled what we think are the best annual fee credit cards. Keep in mind, though, we’re only featuring cards with moderate annual fees here. For the true cream of the crop, be sure to check out our top picks for the best premium credit cards.
CardRatings’ top picks for the best annual fee credit cards
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Frequently asked questions about annual fee credit cards
What is a credit card annual fee?
A credit card annual fee is the fee charged by a credit card company simply for the privilege of membership. The amount varies broadly depending on the card. Some companies have no fee at all. Others will waive the fee for the first year as part of an introductory offer.
Why do credit cards have annual fees?
Credit card companies charge annual fees for two main reasons:
To target specific customer segments: Fees often accompany cards with high-value perks, attracting customers who will use these benefits frequently. These users, even if they pay in full, generate significant revenue through merchant transaction fees, making them profitable customers.
To offset costs and generate profit: Issuing and maintaining credit cards, especially those with generous rewards or premium services, is expensive. Annual fees help cover these operational costs like customer service, fraud prevention, and rewards programs, ensuring profitability.
What is the average annual fee for a credit card?
The average annual fee for a credit card is $95. Many popular “middle-of-the-road” cards charge around $95-$99 for card membership. Premium credit cards usually charge double this, or more, and of course, there are many credit cards with no annual fees at all.
When do you pay the annual fee on credit cards?
For cards with an annual fee from the time it is issued, the fee is most often applied to your account during the first billing cycle. If the fee is waived for the first year, it will be applied to your account in the first billing cycle following your card member anniversary.
Should I get a credit card with an annual fee?
Whether you should get a credit card with an annual fee depends entirely on your spending habits and if the card’s benefits (like rewards, travel perks, or exclusive services) outweigh the cost of the fee for you. If you can maximize the perks and save more than the fee, it’s often a good idea. If not, a no-annual-fee card is likely better.
Are credit cards with annual fees worth it?
If you plan to regularly use a card and take advantage of any added benefits offered, then yes, credit cards with annual fees are usually worth it.
Evaluate the perks and bonuses of the card you are considering applying for and decide if you will be using the card often enough to take full advantage. If you expect to use the card frequently enough to reap the benefits, such as the welcome bonus, then the card is likely a good addition to your wallet. On the other hand, if you don’t expect to use the card very often, the fee could quickly become a waste of your financial resources.
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CardName (See Rates and Fees); For Capital One products listed on this page, some of the benefits may be provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.
