4 Min Read | Published: February 1, 2024

What Is a Credit Card Annual Fee?

Discover if paying a credit card annual fee is worth it. The benefits you can earn on a credit card can be worth more than the annual fee you pay for the card.


To enjoy the features and perks of some credit cards, you pay an annual fee.

Although many people avoid cards that charge an annual fee, cards with fees may be a savvy choice if you can make use of their benefits.

A credit card annual fee is what you pay for certain cards – usually to enjoy special features and perks. The fee is charged most often in these two cases:

  • On cards that offer better-than-average rewards and therefore cost credit card companies more to provide.
  • On cards designed for people with no credit or poor credit who therefore pose a greater risk of defaulting on payments. 

The fee is typically charged in full when you open your account and then once a year in your anniversary month, though a few cards will divide the fee into installments and collect it monthly.1 The fee generally ranges from fairly small, like $492 to $695 or more with cards on the higher end of the spectrum usually offering the most benefits. But there are also many no annual fee credit cards.


Regardless of the amount, some people are reluctant to pay any annual fee. But some experts advise against choosing a card based solely on whether you’ll pay an annual fee. Depending on how you use it, they say, a card with an annual fee – even a high one – may make better financial sense than a no annual fee credit card.3

credit card annual fee

Is a Credit Card with an Annual Fee Worth It? Do the Math!

Here are some common situations in which paying an annual fee may make sense:

  • You have poor or limited credit history and are unable to qualify for a no annual fee credit card.
  • You charge enough that the rewards you earn offset the fee.
  • You travel often, and want the perks offered by certain cards.
  • You want features available on cards that charge a fee, such as an introductory bonus or the ability to transfer points. 

In some cases, accepting an annual fee may be your only way to get a credit card. For example, suppose you have poor credit. Yes, there are some no annual fee credit cards designed for people in this situation. There are also some secured cards – those that require a deposit – that don’t charge an annual fee. If your application is not approved for those options, you may have to choose between the annual fee or doing without a card.


In most of the other situations listed above, you can make the best decision by getting out the calculator and doing some math. For example, let’s consider two cash back rewards cards offered by the same company. Here’s a rundown of Card 1:

  • No annual fee.
  • 3% cash back at supermarkets.
  • 2% cash back at gas stations and some department stores.

Now here’s Card 2:

  • $95 annual fee.
  • 6% cash back at supermarkets.
  • 3% cash back at gas stations and some department stores.

When you work out the math, you discover that even after paying the annual fee you’ll come out ahead if you usually spend at least $61 a week on groceries. If you don’t, the no annual fee credit card may be the better choice for you.

Running the Numbers on Travel Card Annual Fees

You might want to run the numbers on travel credit cards, too. At one end of the spectrum are cards branded for airlines or hotel chains – these cards typically often charge annual fees of $150 or more. Although the rewards you earn generally are limited to the partner brand, the annual fee may still be a good deal. Plus, some cards may waive the annual fee for the first year.


For example: the Delta SkyMiles® Gold American Express Card has no annual fee for the first year (then $150 after that)4 and offers benefits like:

  • $200 Flight Credit: Earn a $200 Delta Flight Credit toward your next trip after spending $10,000 in purchases on the Card in a calendar year.
  • TakeOff 15: Take 15% off anytime you book Award Travel with miles on Delta flights when using delta.com and the Fly Delta app. (Discount not applicable to partner-operated flights or to taxes and fees.)
  • First Checked Bag Free: Enjoy your first checked bag free when flying Delta.
  • Priority Boarding: Receive Main Cabin 1 Priority Boarding on Delta flights.
  • $100 Delta Stays Credit: Get up to $100 back per year as a statement credit after using your Card to book prepaid hotels or vacation rentals through Delta Stays on delta.com/stays.5



Toward the other end of the spectrum are more elite travel credit cards with up to $695 annual fee or more with rich benefits like airline, hotel, rideshare credits, airport lounge access, and preferred member status at branded hotels.


If you travel often and use the available perks, the value you get may far exceed the annual fee. A final point on the math: Don’t forget to consider interest charges.

The Takeaway

Some people prefer no annual fee credit cards, but they may not always be the best option. The right card for you will depend on your financial situation, individual needs, and preferences, so make sure you take the time to consider your available options carefully to ensure that you end up with a card that’s right for you.

Allan Halcrow

Allan Halcrow is a freelance writer concentrating in business, human resources, and diversity and inclusion. He is also the author of four books on management.


All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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