What Does an Annual Fee Typically Account For?

Are you, like many of us, complaining about the annual fee on your credit card? If so, take the time to think of what benefits your card is offering and weigh this value up against the annual fee.

A credit card with an annual fee is usually used when you have a bad credit history and don’t qualify for a fee-free card. Or on the flip side, some premium cards for high spenders come with a fee and give big rewards.  

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For the person with a bad credit record, the annual fee is a type of guarantee. The big spender using a fee card creates a lot of administrative expenses for the card company and the annual fee can be seen as the cardholder’s contribution. 

What Does an Annual Fee Typically Account For?

So, for whatever the reason you have a credit card with an annual fee, you can receive rewards, use the benefits, and pay your annual fee. If you use your card wisely the benefit could outweigh the annual fee. 

What do You Get for Your Annual Fee?

Credit cards with an annual fee offer discounts or cashback on a variety of products and add value to many services. Every card has its own set of advantages. 

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Details regarding all the benefits and rewards offered can be found on the credit card companies’ websites. Most of the companies also have more than one card-option to enable you to choose an affordable card. 

We’ve looked at several cards’ benefits and found that there are some benefits most cards offer in one way or another.  We list a few of these popular benefits here for your convenience. 

Bonuses, Cashback and Thank You Points

Bonuses are normally paid and cashback is given when you spend a specified amount or more on purchases. American Express for instance gives a $250 bonus for spending $1,000 in the first 3 months.  

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Thank You points are handy when frequently purchasing at the same outlets. With Citi Cards you earn 2 X Thank You points at certain supermarkets and gas stations.

Flight Miles and Other Related Benefits 

For frequent flyers, annual airline credit is a very popular perk. Some cards offer up to $200 per year. You can even earn free access to luxurious airport lounges. 

To accrue flight miles per dollar for every purchase you make is a great advantage. An example is Barclays Arrival Plus that offers 2 X miles per dollar spent and you also receive a further 70,000 bonus miles on spending $5,000 or more on purchases.

Commuting 

If your card offers credits for Uber or Lyft services and you commute a lot, pay with your card and you can save $200 or more per year.  

Holidaying and Dining

Many cards offer credit for hotel and resort accommodation, and in many cases, a lower rate is guaranteed. Complimentary items like free breakfast, Wi-Fi, city-tours, and more could form part of the holiday package. 

You also earn credits when dining in selected restaurants.

Internet, Cable and Phone Services

To keep your internet, cable, and phone services paid up could cost a lot.  If you pay for these services with your card and it is linked to these providers you earn credits,

Must I Have the Most Expensive Card to Benefit?

Even if you don’t have the most expensive cards there are still many advantages.  Normally the less expensive cards offer in principle the same advantages as the more expensive ones.

The difference is the smaller percentages, fewer flight miles, and without luxury add-ons. 

What Does an Annual Fee Typically Account For?

Conclusion

Whether you are at the bottom or the top of the income range you could benefit from a credit card that is charging an annual fee. Determine what you need from a credit card before you actively set out to find one.

Then weigh out all the positives and negatives including things like flight miles, discounts on holidays, cheaper daily shopping, and fees before filling out an application. 

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