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Is an annual fee credit card worth it?

Here's how to tell if an annual fee is worth it for you.

An annual fee is the price you’re required to pay each year to continue using a credit card. Generally, paying an annual fee for a credit card means the card comes with upgraded perks compared to a card that doesn’t require an annual fee. After all, issuers need to make their premium cards worth it if they want you to pay for them. You’ll most commonly find annual fees on a few types of cards: rewards cards, premium cards and credit-building cards. Luckily, 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 an annual fee credit card is worth it?

The metric for determining whether paying an annual fee on a credit card is simple: if you earn rewards or perks with the card that outstrips the cost of the card over the course of a year, then paying that annual fee is worth it.

Here’s a simple example using the Blue Cash Preferred® Card from American Express and Blue Cash Everyday® Card from American Express reward cards. The Blue Cash Everyday has no annual fee (see Terms apply, see rates & fees), but earns less cash back than the Blue Cash Preferred, which carries a $95 annual fee (see Terms apply, see rates & fees) after the first year.

Credit cardAnnual feeCash back as statement credit
Blue Cash Everyday® Card from American Express$02% at US gas stations and select US department stores, 3% at US supermarkets on up to $6,000 per year, then 1% after that and on other eligible purchases.
Blue Cash Preferred® Card from American Express$95 (after your $0 introductory year)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 other eligible purchases

Since the Blue Cash Everyday requires no annual fee, any cash back you earn is pure value. But in the case of the Blue Cash Preferred, you’ll need to earn at least $95 in cash back starting the second year to break even — only after that will the card start providing value. Thankfully, it’s not difficult to earn that $95. Here’s a look at how much you might expect to earn back based on some average spending values within the US each month.

Reward categoryAverage monthly spendCashback as statement credit earned
Gas stations and transit$200$6
Streaming services$50$3
Everything else$1,500$15

Just one month of average spending will earn you $66 cash back when you make these purchases with your Blue Cash Preferred. That means it will take just two months before you start generating value on your purchases. After that, you’ll reap the benefits of the card’s greater earning rates. For comparison’s sake, here are your monthly earnings with the lower tier Blue Cash Everyday.

Reward categoryAverage monthly spendCashback as statement credit earned
Gas stations and transit$200$4
Streaming services$50$0.50
Everything else$1,500$15

Over the course of a year, the Blue Cash Preferred will earn you $792 in cash back, but $697 when taking the annual fee into account. You’d earn $486 with the Blue Cash Everyday.

Should I get a credit card with an annual fee?

Anyone who travels often or is looking to get better credit card perks should consider a card with an annual fee. That said, everyone has different priorities and financial needs. To determine whether or not you should get a card with an annual fee, consider the following:

  • 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.
  • 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 cashback 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.
  • 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 so that your earned rewards offset the annual fee. If you don’t think you can do this, it’s better go with a no-annual-fee card.
  • 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.
  • 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.

Pros and cons of a credit card with an annual fee

The benefits and drawbacks mostly depend on the kind of card you get, though you tend to see a similar range of pros and cons across such 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.
  • Generous signup bonus. Many annual fee cards offer a particularly valuable signup bonus.
  • 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.
  • 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, or baggage delay reimbursement.


  • 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.
  • Potentially high APR. 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 don’t at least earn back the cost of the card each year, you’re losing money.

Compare credit cards with an annual fee

Name Product Welcome Offer Rewards Annual fee Filter values
American Express® Gold Card
60,000 points after spending $4,000 in the first 6 months
4x at restaurants including delivery and Uber Eats; 4x at US supermarkets on up to $25,000 annually (then 1x points), 3x points on directly-booked flights and 1x points on other eligible purchases

Rose Gold is here to stay. Card Members can choose between a Gold or Rose Gold Card.

Earn up to 4x points on select purchases, a bevy of travel perks, and a welcome offer worth up to $600 based on our valuation with this upper-mid tier travel card. Terms apply, see rates & fees
Delta SkyMiles® Gold American Express Card
40,000 miles after spending $1,000 in your first 3 months.
Plus, earn up to $50 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
2x miles on Delta purchases, restaurants and at US supermarkets and 1x miles on other eligible purchases
$0 intro annual fee for the first year ($99 thereafter)
Earn 40,000 bonus miles after you spend $1,000 in purchases on your new card in your first 3 months. Terms apply, see rates & fees
Blue Cash Preferred® Card from American Express
$300 statement credit 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 other purchases (redeem as statement credit)
$0 intro annual fee for the first year ($95 thereafter)
Earn a $300 statement credit after you spend $3,000 in purchases on your new card within the first 6 months. Having 6 months to earn a welcome offer is a rare benefit as most cards give you only 3. Terms apply, see rates & fees

Compare up to 4 providers

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

There are several reasons this type of card might 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 credit card with an annual fee

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

Should I pay an annual fee to build credit?

Not if you can help it. If you’re building credit from a poor credit history, you want to remove financial obstacles that can lead to missed payments. An annual fee cuts into your finances that would be better spent keeping your account up to snuff. What’s more, there are a sizable number of credit cards out there designed for building credit that don’t charge an annual fee, such as the Petal® 2 “Cash Back, No Fees” Visa® Credit Card. Secured credit cards are another credit-building option that don’t necessarily charge annual fees, though they often require a one-time security deposit.

However, sometimes you might not have a choice in the matter. Many of the credit-building cards that don’t charge annual fees are for those without a prior credit history. If your credit is poor, you might have to bite the bullet and choose from a credit card designed for poor credit that happens to charge an annual fee. Review your income carefully before taking on one of these cards — you don’t want the card’s annual fee and potential late payments to put you in a tough financial situation.

How to waive your credit card annual fee

Some credit card annual fees are automatically waived for the first year by providers as part of a promotion. You’ll see these advertised as such, with the revert annual fee rate listed in the card terms. However, military members can also have their credit card annual fees waived as part of a series of benefits offered under the Servicemembers Civil Relief Act (SCRA). The exact benefits vary from provider to provider, but they often include permanent waived annual fees for many cards. This can be a huge value play for some cards, particularly premium cards like the Amex Platinum Card or Chase Sapphire Reserve.

Finally, you can try asking your provider to waive your annual fee for the year. It’s not uncommon for providers to make this allowance if you give them solid reasoning, such as temporary financial hardship or your long history as a customer. Just don’t get your hopes up for a repeat performance the following year.

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 credit cards or compare other credit cards until you find what suits you best.

Frequently asked questions

Are credit cards with an annual fee good for balance transfers?
In general, no. Credit cards with an annual fee rarely come with a 0% intro APR period on balance transfers.

When do I pay the annual fee?
You’ll often pay the annual fee from the moment you activate your account or at the end of your first billing cycle. After that, you’ll be charged an annual fee every year at around the same date.

If I don’t want to pay an annual fee anymore, is it better to downgrade or cancel the card?
If downgrading to a no-annual-fee card is an option with your card issuer, this may be the way to go. That’s because you get to keep your card, thus keeping your account history and credit line, which affects your overall utilization rate.

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