What’s an annual fee you may be wondering? Well, to put short, it’s basically banks or financial institution charging you a yearly fee to use their credit cards. Why? Well a lot of these cards come with benefits and for you to reap those benefits, you have to pay a fee.
The card issuer adds the annual fee to the customer’s statement. It’s essentially another purchase if you think of it that way. However, there are ways that you can avoid these fees!
Cards With An Annual Fee
Typically, for all banks or financial institution, they probably have a few cards that charge an annual fee. However, not all cards require a annual fee. If you’re looking for a rewards credit card, premium credit cards, or secured credit cards, then expect to pay an annual fee!
Cards with an annual fee tends to come with a high bonus. You may see a higher rate for cash back as well. Travel cards tend to have an annual fee due to the amount of rewards you can get back and the fact that you may actually qualify for other benefits at the airport.
How To Avoid An Annual Fee
You’ll usually find that annual fees are waived the first year that you have the credit card. If you ever feel like that the annual fee isn’t worth it, then you can always choose to close your account. However, doing so will impact your credit score.
Before you choose to close your account out make sure you access the impact your credit score will take and be sure to redeem all the earnings you have accumulated while owning the credit card. You may also switch to a different card from the same issuer to avoid the annual fee.
Of course, downgrading to a “lesser” card may not give you the same benefits, but you’ll still find that you can receive at least some benefit to owning one. There are even some premium cards that will allow you to waive the annual fee if you charge or spending a certain amount per month, but that is up to your issuer.
Paying an annual fee isn’t necessarily a bad thing, sometimes it’s just a necessary part of having the credit card you want. But again, be sure the benefits of the card are worth paying the fee. Compare your card to similar credit cards from other credit card issuers to confirm you’re getting a good deal.