Are credit cards worth the annual fee?

The galaxy of credit cards spans far and wide.  There are travel cards that whisk you away to distant shores. Cash-back cards sprinkle financial rewards like stardust and rewards cards that unlock an array of exclusive perks. There are credit cards tailored to nearly everyone’s financial goals. including business owners, those looking to build credit, as well as retail cards, gas cards and more. 

But not all of these cards are free, with some charging annual fees under $100 a year and others as high as $5,000 a year. 

Deciding whether a card is worth paying an annual fee will depend on if the rewards or benefits you’ll actually use will equal or outweigh the cost of the card. For example, access to airport lounges is great, but not useful if you don’t spend a lot of time in airports.

Why do some credit cards have an annual fee?

While there are a lot of great credit cards that don’t charge an annual fee, the ones that do often come with exclusive perks, rewards and premium services. 

For example, The Platinum Card® from American Express (terms apply, rates & fees) comes with a $695 annual fee. In exchange, an Amex Platinum cardholder can access a slew of luxury benefits, including up to $1,500 in statement credits for various types of purchases, automatic elite status with certain hotel and rental car companies, numerous travel protections and premium airport lounge memberships.

For a lesser $0 intro annual fee for the first year, then $95 annual fee, the United℠ Explorer Card * The information for the United℠ Explorer Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. offers its cardholders the first checked bag free for the cardholder and a companion on the same reservation as well as priority boarding, various travel protections and a welcome bonus of 60,000 miles after spending $3,000 on purchases in the first three months of account opening.

Annual fees allow banks to offer perks that would otherwise be difficult for the average user to acquire on their own. Simply put, banks want your business and their cards become more attractive if they can offer benefits that exceed the cost.

Annual fees also provide the ability for issuers to sustain the infrastructure required to provide exceptional customer experiences and benefits. It can also help create a sense of exclusivity and allure, appealing to individuals seeking a higher level of service, convenience and prestige.

When do you pay the annual fee on a credit card?

The fee will typically appear on your first billing statement after you’ve been approved for the card. Some cards will waive the fee for the first year, in this case, the fee will appear on the anniversary of the card account opening. Every year thereafter, and generally in the same month in which you got the card, the annual fee will be added to your statement.

While you aren’t required to pay the annual fee in full when it appears on your statement, any unpaid balance (including any unpaid portion of the annual fee) will be subject to the card’s ongoing interest rate.

Is it worth an annual fee for a credit card

It depends. It’s worth paying an annual fee if you’ll take advantage of enough rewards and benefits to outweigh the cost of the annual fee.

For example, the Blue Cash Preferred® Card from American Express (terms apply, rates & fees) carries a $0 intro annual fee for the first year, then $95. The card offers a cash-back rewards program allowing cardholders to earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit and 1% cash back on other purchases. Cash back is received in the form of Rewards Dollars that can be redeemed as a statement credit or for eligible items at Amazon.com checkout. So, if you know that you’ll max out the $6,000 spending at U.S. supermarkets alone, you’ll earn at least $360 in cash back. In this case, you’re getting more in return than the ongoing annual fee, plus any additional cash back you can earn in the other categories. That’s definitely worth it.

Most travel rewards cards charge an annual fee in exchange for a generous welcome bonus and the ability to earn airline miles or points that can then be redeemed for airfare, hotel stays or rental cars. 

Consider the Chase Sapphire Preferred® Card, which comes with a $95 annual fee, but offers a welcome bonus of 60,000 points after spending $4,000 on purchases in the first three months of account opening. The value of that bonus is worth 25% more when you redeem those points through the Chase Travel℠ portal, which far outweighs the annual fee. 

In addition to the bonus, you can earn 5 points per $1 on travel purchased through Chase Travel℠, 3 points per $1 on dining, select streaming services, and online grocery purchases (excluding Walmart, Target and wholesale clubs), 2 points per $1 on all other travel purchases and 1 point per $1 on all other purchases. Cardholders also get numerous travel benefits, such as primary car rental insurance, trip cancellation/interruption insurance, lost or stolen baggage insurance and trip delay insurance.

All those benefits are definitely worth the annual fee — if you use them. If you don’t travel enough to take advantage of the perks then the annual fee may not be worth it.

The Chase Sapphire cards offer a trove of travel protections. Here’s a complete rundown of what you’ll get.

When an annual fee card might make sense

Deciding whether an annual fee is worth it boils down to the value the card may offer you based on your spending and lifestyle.

For example, if you are a frequent United Airlines flyer who always checks a bag, then having the United℠ Explorer Card * The information for the United℠ Explorer Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. , which carries a $0 intro annual fee for the first year, then $95 annual fee has the potential to save you and a companion at least $120 on baggage fees for one domestic round trip flight alone. If you take multiple United trips a year with checked bags, that card’s annual fee is much less than what you’d pay overall for your luggage.

Evaluating the value of an annual fee requires that you do a bit of math to figure out whether your spending and lifestyle patterns will align with a particular card’s rewards program and benefits.

While paying an annual fee may not be worth it for everyone, there are certain scenarios where it can be worthwhile. Here are a few situations in which paying a credit card annual fee may make sense:

1. Rewards and perks. It can be worth paying an annual fee when the rewards and perks that you will use are worth more than the annual fee. The key is to make sure you will actually use the rewards offered. 
2. Extensive travel benefits. Premium travel credit cards often come with a nice variety of travel-related benefits, such as airport lounge access, travel insurance coverage, concierge services and no foreign transaction fees. If you are a frequent traveler, the convenience and savings of these perks may outweigh the annual fee, making it a worthwhile investment.
3. Building or rebuilding credit. For individuals looking to establish or rebuild their credit history, secured credit cards or certain credit-builder cards may require an annual fee. In these cases, paying the fee can be a stepping stone toward improving your creditworthiness and help you qualify for more favorable credit card options down the road.
4. Exclusive offers and discounts. Certain credit cards with annual fees provide access to exclusive discounts, early access to sales or partnerships with merchants that offer special deals or rewards. If these discounts and offers align with your spending habits and can potentially save you money in the long run, the annual fee may be justified.

When considering a credit card with an annual fee, it’s smart to weigh the value of the card’s benefits against your spending habits and financial goals. Compare the benefits, rewards and perks offered by different cards, and calculate whether the savings and advantages outweigh the annual fee. Carefully read the terms and conditions of each card, including any limitations, restrictions or redemption requirements associated with the rewards, to make an informed decision.

Frequently asked questions (FAQs)

^{For rates and fees for The Platinum Card® from American Express please visit this page.}

^{For rates and fees for the Blue Cash Preferred® Card from American Express please visit this page.}