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Is an annual fee credit card worth it?

Get a generous signup bonus and more points on purchases.


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Why do some credit cards have annual fees? For the most part, paying an annual fee for a credit card often means getting upgraded perks. After all, issuers need to make their premium cards worth it if they want you to pay for it. If you regularly use the additional features offered by an annual fee credit card, you’ll more than earn back the value you’re paying for.

Here are the common benefits of an annual fee credit card and a breakdown of whether this kind of card is right for you.

How do I know if it’s worth getting a credit card with an annual fee?

Everyone has different priorities and financial needs, so to answer this question, consider the following:

  1. Do you have good credit or higher?

    If you don’t have good credit, you’ll likely need to settle for a secured card. These are solid credit-building options that come with a small annual fee of up to $49. With timely payments, you can improve your credit and get a decent rewards card. But if your credit score is great, you can easily get approval for unsecured credit cards with more worthwhile rewards, but a higher annual fee.

  2. Do you want to earn more rewards?

    Credit cards with an annual fee often have a higher rewards rate than their no-annual-fee counterparts. Paying a higher fee could be worth it, however, if you often take advantage of the perks. For example, a cash back card with a lower annual fee might let you earn 3% cash back at US supermarkets, but a card with a higher fee might let you earn 6% cash back. Hotel cards are also known for earning higher rewards than similar no-annual-fee cards, whereas airline credit cards often earn the same rewards rate.

  3. Are higher rewards enough to cover the annual fee?

    Earning a higher rewards rate is definitely better than earning less, but you need to make sure you spend enough money so that the rewards you earn offset the annual fee and let you earn more than you would with a no-annual-fee version of the card. Otherwise, you better go with a no-annual-fee card.

  4. Do you want to earn a generous signup bonus?

    Cards with an annual fee can sometimes be worth it solely because of their signup bonus. Some travel credit cards offer a bonus worth between $500 and $1,000 or more in travel purchases. For a card with an annual fee of less than $99, this is definitely a good deal.

  5. Do you want additional perks?

    Cashback credit cards with an annual fee, rarely offer impressive perks. In most cases, you get to earn a slightly higher signup bonus or a slightly higher rewards rate. But if you get a travel credit card, you will be surprised.

    Some of the perks you can get include, free checked bags on a particular airline, airline fee credit, priority boarding, lounge access, Global Entry or TSA PreCheck application fee credit, hotel or airline elite status, travel insurance and more.

Who are credit cards with an annual fee best for?

Anyone who travels often or anyone looking to get better credit card perks should consider a card with an annual fee. But you also need to be a responsible cardholder because this type of cards often come with higher interest rates.

What are the common pros and cons of a credit card with an annual fee?

The benefits and drawbacks mostly depend on the kind of card you get. In addition to rewards cards, you can also find secured cards requiring annual fees. These cards will have different perks and features than an unsecured card with an annual fee.

Since secured cards can be considered a niche within cards with an annual fee, we’ll focus on features of unsecured credit cards. Here are some of the features you’ll often find on various annual fee unsecured credit cards:


  • High rewards rate. Earn more points or miles on select categories of purchases than you would with a rewards card with no annual fee. Depending on the card, accelerated rewards categories will be either general travel purchases or specific brand purchases, such as Delta miles on flights or Hilton points on hotel stays.
  • Generous signup bonus. Many annual fee cards offers a particularly valuable signup bonus. Based on the card you choose and its annual fee, you can earn a bonus with a value between $500 and $1,000 or more.
  • Intro annual fee. Some cards offer a $0 intro annual fee for the first year. This can be a solid deal considering you get perks for 12 months without paying the annual fee. Unfortunately, you won’t find cards with an annual fee of $200 or more that offer this.
  • No foreign transaction fee. Some annual fee credit cards will waive foreign transaction fees, so you can use your card freely when traveling abroad or when making online purchases with foreign merchants.
  • Travel perks. This is the bread and butter of many annual fee cards. Get perks such as a companion certificate, airport lounge access, free hotel stays, annual travel credit, concierge service and more.
  • Travel insurance. Many, but not all, annual fee cards offer some level of travel insurance. Examples include travel accident insurance, lost luggage reimbursement, baggage delay reimbursement, trip cancelation insurance, car rental collision damage waiver and more.


  • Annual fee. You’ll need to pay an upfront fee each year for using the card and its perks. Depending on your card, this can be anywhere from $95 to $550 or more.
  • No intro APR period. It’s rare to find a credit card with a high annual fee that offers a 0% intro APR period on purchases, balance transfers or both. Cards that offer this perk usually have a lower annual fee.
  • High APR. Pay your balance on time to avoid accruing high interest. Of course, the APR you get mostly depends on your creditworthiness, but these types of cards often come with an APR on the higher end.
  • Require frequent use for value. If you’re someone who only occasionally travels or only uses a credit card for purchases, you’ll find it hard to come out ahead in terms of value when using an annual fee credit card.

Compare credit cards with an annual fee

Name Product Welcome offer Rewards Annual fee Filter values
Blue Cash Preferred® Card from American Express
$300 after spending $3,000 in the first 6 months
6% on select US streaming services, 3% on transit and US gas stations, 6% at US supermarkets on up to $6,000 annually, then 1% after that and on all other purchases
$0 intro annual fee for the first year ($95 thereafter)
Perfect for families: Get up to 6% on everyday purchases and a welcome offer worth $300. This heavy-hitter rewards card has uncontested value. Terms apply, see rates & fees
Chase Sapphire Preferred® Card
60,000 points after spending $4,000 in the first 3 months, a value of up to $750 through Chase Ultimate Rewards. Plus up to $50 statement credit towards groceries.
5x points on Lyft, 2x points on up to $1,000 on groceries until April 30, 2021, 2x points on travel and dining and 1x points on all other purchases
Earn a signup bonus worth $750 plus up to $50 statement credit towards groceries with this popular travel card.
American Express® Gold Card
60,000 points after spending $4,000 in the first 3 months
4x at restaurants including delivery and Uber Eats; 4x at US supermarkets on up to $25,000 annually (then 1x points) and 3x points on directly-booked flights
Earn up to 4x points on select purchases, a bevy of travel perks, and a welcome offer worth up to $600 with this upper-mid tier travel card. Terms apply, see rates & fees

Compare up to 4 providers

When shouldn’t you get a card with an annual fee?

Because there’s a variety of credit cards with an annual fee, there are several reasons this type of card may not be a good choice for you. For example, you might not want a card with an annual fee if you:

  • Can’t pay your balance on time.
  • Can’t offset the annual fee with the rewards you earn.
  • Can’t afford to pay the annual fee.
  • Don’t travel often.

Alternative to a card with an annual fee

There are excellent no-annual-fee credit cards you can consider instead.

Bottom line

Credit cards with an annual fee offer better perks and features than their no-annual-fee counterparts. To make paying the annual fee worth it, pay off your balance on time and use the perks to offset the card’s cost.

If you’re not sure whether paying an annual fee for your credit card is the right option, check out some best no-annual-fee travel credit cards or compare other credit cards until you find what suits you best.

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