With credit cards often come annual fees. We can call this an annual fee card, and if you’re like most cardholders, you get wary when these fees come into play.
The American economy is heavily reliant on credit card users. Don’t get the idea wrong, but if you need to make purchases and don’t have cash on hand, your credit card does come in handy in most cases. But, some people believe they’re just a way to tie you down in debt, which most people associate with extra charges.
It isn’t always a measure to get you into debt, though. With the always soaring cost of living, a little credit can go a long way to help you meet your day-to-day expenses. So, what about the credit card annual fee? What do you think about it? Most people consider the cards without fees to be the best. So, how can you determine if it’s worth it for you to pay for a card with an annual fee?
What Is an Annual Fee?
Let’s start with the obvious question here. In simple terms, this is what you pay as a cardholder to continue using the card. They generally have no relation to the interest rate you incur when you use your card. The higher the annual fee of your card, the better the benefits you’ll enjoy. In this way, you can think of it as an investment.
Annual fees can be charged in some ways, but the most common is charged in the month when you are approved. For example, if you’re approved today, your annual fees will be charged in October 2019. They are usually charged on the last day of the month, in case you were wondering.
Another less common way that annual fees are charged is through a plan called monthly installments.
Is It Worth It to Have a Card with Annual Fees?
In most scenarios, yes, it is worth it having a card with annual fees. Why?
- Poor Credit: Most people have poor credit or at times, no credit at all. Here, you’ll have to settle for this card because it is all you have.
- Intro Bonus: Most of these cards offer great intro bonuses, but with an annual fee card, the bonus is large.
- Product Change: If you at some point wish to degrade your product to a lesser one, then an annual fee card should be what you consider. You can downgrade with the same history and the same line of credit, and it comes with fewer rewards.
- The other reason to have an annual fee card is that you can transfer points.
What Types of People Are Great with Credit Cards with Annual Fees?
With that entire set of information in mind, let’s see if you’re a good fit for annual fee credit cards.
- How is your credit score? If you’re in the red on your credit score, then you’re a good fit for this type of card. If not for any other reason, it’s because you can’t be approved for any other card than this one.
- If you have a good score, then a credit card with annual fees is also good for you. With this type of credit card, you’ll get better benefits and rewards than with ones with no fees.
Choosing what type of credit card you should get isn’t that difficult. And, deciding on the one with annual fees will, in most cases, turn out to be worth it for you.