Credit Card Annual Fees – Is it Worth the Amount You Pay?

The annual fee on a credit card is the money you have to pay once in a year to be eligible for using the credit card and avail its benefits and rewards.

The annual fee varies from one credit card to another and one cardholder to another. Some cards have a significantly higher fee but it is quite less with regards to the number of benefits offered on the card. In many cases, higher credit card fee is due to poor credit history of the cardholder.

Credit card issuers also provide the facility for credit card annual fee reversal or waiver if the cardholder spends at least a specific amount on his credit card in a calendar year.

Credit cards with annual fees come with a host of offers and benefits which eventually are more than the amount charged as the annual fee. Some of the reasons why you should opt for credit cards with annual fees are mentioned below:

Welcome Benefits –

• Cardholders get a number of welcome benefits such as discounts, access to premium services, introductory discounts, etc. during first few days of the card issuance
• One also gets a number of shopping vouchers which can be used for purchasing both online and offline
• One also gets cashback offers depending upon the amount spent on the card during the first month or quarter

Enhanced Rewards Programme –

• Zero annual fee credit cards are covered under basic reward points program that offers next to zero benefits
• Credit cards with annual fees offer huge rewards which eventually help in increasing the savings
• Reward points can also be redeemed to get shopping vouchers

Complimentary Lounge Access –

• If you are a frequent flyer and have to use the airport lounges a lot, you can opt for such cards that offer multiple free airport lounge accesses which otherwise costs a lot
• Most cards offer domestic lounge accesses whereas premium credit cards with annual benefits offer complimentary international lounge accesses across the globe
• The number of free lounge accesses per quarter is also more than that in the zero annual fee credit cards

Travel Benefits –

• Most credit cards charging hefty annual fees come with various travel benefits such as Air Mile conversion plan, discounted hotel membership plans, cab bookings, etc.
• This can help you eventually in saving some money which otherwise would have been spent on booking tickets or stays

Annual/Renewal Fee Waiver –

• If the cardholder spends a specific amount on his credit card within a calendar year, his annual/renewal fee is waived off or reversed
• This ensures the cardholder saves even on the annual fee amount on the credit card

Reward Points Conversion –

• Most credit cards with annual fee come with Reward Points conversion feature through which the reward points can be converted into the amount and added to the credit card account as credits
• The cardholder then has to pay less for the month enabling him to save on his credit card bills

The joining fee is generally charged on the last day of the month of your credit card approval. In some cases, the joining fee is charged as soon as the credit card account is opened.

The credit card annual fee is charged on completion of the calendar year or around the same time when the joining fee was charged.

When a cardholder upgrades or downgrades his credit card, the annual fee charged already on the previous card is refunded on a prorated basis in most cases. However, policies of banks vary on case to case basis so it is best advisable to contact the card issuer to get the complete details of the card.

Zero annual fee credit cards are beneficial as you do not have to pay an annual fee on such cards every year. You can still avail the benefits such as cashbacks, discounts, offers, etc. provided by the card at no extra cost. However, these cards come with limited features and you do not get all premium facilities on these cards.

There may be zero annual fee credit cards that offer huge cashback but they may not provide you airport lounge access or Air Miles conversion plan. If you want to avail all the facilities, you will need to apply for a number of credit cards from different categories. In all probability, you will end up having a number of credit cards with specific benefits and still may not be able to avail all facilities provided by a credit card with an annual fee.

It is not unknown how tough it can be to get a credit card. When talking about multiple zero annual fee credit cards, it is also worth mentioning that you should wait up to six months before applying for a new credit card. There are chances banks may not approve your credit card which can lead to the lowering of your credit score. Thus, getting a number of zero annual fee credit cards may sound interesting but it may not be practically feasible to manage and maintain so many credit accounts every month.

A credit card with annual fee having all premium benefits in one card can be your one-stop solution for all your spendings. You will get all the facilities in one place and it will be convenient for you to make the bill payment easily. Using the single credit card for maximum spendings can help in getting your annual fee waived off if the amount spent is more than the minimum threshold limit.

Lifetime-free credit cards have their benefits and credit cards with annual fees have their own benefits. However, everything boils down to the fact that your credit card should match your spending pattern for maximum benefits.

If you do not avail premium facilities such as airport lounge accesses, air travel, five-starred hotels, etc., there is no use of having a card that offers these facilities and charges you for that. But if you avail such facilities quite frequently, it is advisable to apply for the credit card that provides these facilities, albeit, at some charges.

In the end, it is recommended to first make a list of items on which you spend and see which card suits your needs the best. If your requirements are fulfilled by zero annual fee credit cards, go for it. If not, opt for the credit card that provides you with the required services at the lowest annual fee.