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Should You Ever Pay a Credit Card Annual Fee?

A lot of other personal finance nerds call people who pay an annual fee on a credit card “stupid”.

I don’t agree.

Credit cards with annual fees are not necessarily evil—they can, in fact, be a great deal…for the right person. If you:

  • carry a balance on your credit cards and pay interest or
  • on average, spend less than $1,000 on your credit card every month,

a credit card with an annual fee probably is not for you. So if this is you and your current card has an annual fee, think about switching credit cards.

On the other hand, if you:

  • charge $15,000 or more on your card each year and/or
  • travel a lot

certain cards with annual fees may be good bets.

For example, American Express offers two versions of it’s Blue Cash credit card. One card has no fee, the other has a $75 annual fee. The card without the annual fee pays

  • 3% cash back at U.S. stand-alone supermarkets
  • 2% cash back on gasoline at U.S. stand-alone gas stations and select major department stores
  • 1% cash back on other purchases

The card with a $75 annual fee pays

  • 6% cash back at U.S. stand-alone supermarkets
  • 3% cash back on gasoline at U.S. stand-alone gas stations and select major department stores
  • 1% cash back on other purchases


Here’s an example of why credit card annual fees aren’t always bad. Using the Blue Cash Everyday® Card from American Express® as an example, here’s how the rewards shake out for people based on how much they spend and which version of the card they choose. (Keep in mind both examples assume the cardholder never pays interest!)

Why Credit Card Annual Fees Aren't Always Bad


Besides accelerated rewards, credit cards with annual fees may provide other benefits, particularly to frequent travelers…a classic example is the $450-a-year Platinum Card® from American Express, which offers members access to airport lounges, concierge service, hotel reservation guarantees, and more. Other travel and mileage rewards cards offer perks like free companion tickets, priority boarding, and priority status for getting first class or hotel room upgrades.

Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.


Published or updated on March 15, 2012

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30.

  1. I totally agree. My boyfriend just got a Southwest card a few months ago that came with 50,000 points on it, and a $69 annual fee. Because he won’t be using it to rack up any charges, he basically just got hundreds of dollars worth of airfare for $69.
    My dad is expert at getting miles (he’s flown my family on multiple trips a year just using miles from credit cards) and is totally not against paying an annual fee if the rewards are worth it, and sometimes, like you accurately point out, they are!

  2. […] month and pay the balance in full, paying this fee will be worth it to score extra cash back. Read Are credit cards with annual fees worth it? to find out if an annual-fee card is a good move for […]

  3. Colin says:

    I’m in my early twenties and I am always alarmed by the number of my friends and people I know my age that have no credit card. It’s such a sound way to build up your credit and save money on purchases at the same time. Credit card companies got such a bad reputation from irresponsible people who are passing those same values on to their children. I wish more people my age would read blogs like yours and listen to sound advice.

    I fear for what my generation will do to this poor, poor world.

  4. Andrew says:

    I carry the Delta SkyMiles Amex card with a $95 annual fee. The card comes with an annual $99 companion fare certificate that saves me at least $300 when I fly across the country with my wife to visit my parents. It also offers the first checked bag for free for myself and anyone else on the same itinerary. At $25/bag, this saves me $100 for each round trip with my wife.

    The benefits for myself certainly outweigh the annual fee but this might not be the case for someone who doesn’t travel often, doesn’t travel with a companion, or has access to more discounted airlines.

  5. David says:

    You have the AmEx rewards crossed. The one with the $75 annual fee gives 6% on groceries and 3% on gas and department stores.

  6. […] fees can be OK. Often times, cards with annual fees have better rewards programs that will benefit card members who spend a lot on the card each year. Consider what you hope to […]

  7. […] should be no annual fee. I wrote an article on annual fees a while back that looked at a few exceptions to this rule, but most people our age have no business […]

  8. […] There should be no annual fee. I wrote an article on annual fees a while back that looked at a few exceptions to this rule, but most people our age have no business paying an annual fee for a credit card. […]

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