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Is a bank card price paying the annual price?

Credit card rewards can be an extremely lucrative way to generate a little extra income. Being organized and financially responsible is important, but by doing so you can make hundreds or even thousands of extra dollars every year. When you end up signing up for multiple credit cards in order to receive the lucrative welcome offers, you often have to decide whether to keep the credit card after the first year. There are pros and cons to keeping or canceling a credit card, so this guide will help you decide whether a credit card is worth paying the annual fee.

Three reasons to apply for a credit card

There are three main reasons for applying for a credit card:

Any welcome offer or sign up bonus the card could offer. The welcome offer is often one of the greatest ways to earn hefty points.
The rewards or cashback that you earn using the card. This can be a good tariff for everyday purchases or attractive bonus categories
All the benefits of having the card. These can be travel benefits such as free hotel accommodation or checked baggage, or money-saving perks such as an introductory offer of 0% APR.

When you have the financial resources and the discipline to pay your credit card in full each month, and the organization to keep track of multiple credit cards, there are very few cards that are not worth getting. The cashback or rewards that come with the welcome offer will almost always be higher than the annual fee. The real question arises after 12 months: what to do if the annual fee is due again?

Should you close a card with no annual fee?

Before we talk about what to consider when deciding whether a credit card is worth the annual fee, it's worth talking about credit cards with no annual fee. There is (of course) no annual fee for a credit card with no annual fee, so it's usually a good idea to keep it.

This is especially true if it is a card that you have owned for a long time. The average age of your credit accounts is one of the factors that determine your creditworthiness. Hence, closing a credit card that you have owned for a long time can have a materially negative impact on your credit score. Closing a no-annual fee card may only make sense if you have a lot of credit cards and you find yourself mentally stressed to keep an eye on them all.

How much do you use the credit card (and its benefits)

The real question you need to ask yourself is how much is worth the credit card. Is it a card that you use regularly? If so, are you spending enough on the card that the rewards you earn offset the annual fee charged? Another thing to consider is whether the card offers ongoing perks like lounge access, free checked baggage, or free hotel room nights.

How much value do these services bring you each year? Try to at least roughly estimate the monetary value of each of the card's benefits. If it's more than the annual fee, keep the card. If this is less than the annual fee, it may be time to cancel the card.

What to do instead of closing the credit card

If you have decided that the credit card in question is not worth paying the annual fee, there is one more thing to consider before closing the card. Perhaps you would like to change the product or switch your card to another card from this issuer without an annual fee. The benefit of changing a product is that your account stays open. That means you don't have to contact dealers or change ongoing fees. It also helps increase the average age of the accounts, which will benefit your creditworthiness.

One disadvantage of changing the product is that you may no longer be able to apply for a new version of that credit card. For example, you can downgrade your American Express Everyday Preferred card to a free American Express Everyday card. That means you don't have to pay the $ 95 annual fee for the Everyday Preferred card. However, if you switch to an Everyday card, you may not be eligible for the welcome offer when you apply for a new Everyday card (instead of switching products). That could mean missing out on a welcome offer worth hundreds of dollars.

Conclusion – is it worth it?

There is no right or wrong answer to the question of whether a credit card is worth the annual fee. The answer will be different for each person with their unique spending and rewarding habits. But you should at least actively choose to pay (or not pay) your credit card annual fee every year. Don't just pay it out of habit. Mint can be a great tool to help you know when you are being charged an annual fee. When you see your annual subscription, it's time to research the numbers and make sure a particular credit card is still working for you.

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Dan Miller (66 posts)

Dan Miller is a freelance writer and founder of, a website that helps families travel for free / cheaply. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 children.


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