Annual fees on popular credit cards can reach $695 per year, which is a significant sum when interest payments and other fees are factored in. However, some commonly held cards do not charge an annual fee at all, and determining how to weigh an annual fee in addition to the many other factors of a card is anything but simple. Read on to learn more about credit card annual fees and the best travel credit cards to see if they’re worth it for you. We also take into account the annual fee for the Amazon credit card.
What is a Credit Card Annual Fee?
A credit card annual fee is simply a one-time fee charged for each year that a credit card account is open. Annual fees are not charged on all credit cards, and the amounts charged vary greatly. Surprisingly, annual fees are not widely accepted. While they are a visible metric for comparison, it is important to remember that their cost is only one factor in a credit card’s overall cost-effectiveness and one of several ways credit card companies make money.
Cards often have annual fees to make up for other features that are especially helpful to the cardholder. This includes special perks and features, as well as other above-average rewards. They’re also common on cards for “riskier” customers with bad credit who might have trouble getting approved otherwise.
When Is the Annual Fee on a Credit Card Paid?
A credit card annual fee is typically paid at the time of account opening, implying that an initial payment “covers” the fee for the following year. An annual fee may be divided into monthly payments due at the same time each month as the card’s bill. The most common way is for an annual charge to be billed in the same month every year, no matter how long the account has been open.
What Credit Cards Charge an Annual Fee?
An annual fee is not charged on all credit cards. Cards with an annual fee typically include some additional benefits, such as:
- Gift cards
- High-end credit cards
- Secured credit cards
Because an annual fee raises the cost of having a credit card, any benefit you receive from your credit card should outweigh the cost. For instance, if your rewards credit card has an annual fee, the rewards you earn should be greater than the fee you pay to keep the card open. Otherwise, you will lose money.
Why Does Credit Card Have Annual Fee?
A rewards credit card, such as a cashback card, with no annual fee, can still provide significant savings on purchases. However, cards with an annual fee increase the rewards by several notches.
For example, a credit card that offers 3% cash back on groceries sounds appealing, doesn’t it? But, for a reasonable annual fee, you could get 6% cash back on groceries, as well as a slew of other rewards and perks.
The rewards programs for travel rewards cards and airline-branded cards can be very good, like a $200 credit for purchases made in-flight or a free first-checked bag.
Best Travel Credit Card Annual Fee
Along with great rewards, the best credit card for travel with an annual fee comes with several useful perks. There may be insurance for rental cars, lost luggage, and late flights, and there may also be access to airport lounges.
Although good or excellent credit is required for the best offers, people with lower credit scores can still benefit if they know where to look. WalletHub’s editors compared over 1,500 offers to find the best travel credit card with an annual fee for people in each credit category.
#1. Capital One Venture Rewards Credit Card
Even though it has a high APR and a $95 annual fee, the Capital One Venture Card is the best travel credit card overall because it has a great sign-up bonus, double miles on all purchases, and easy-to-understand rules for cashing in miles. Spending $4,000 in the first three months earns you 75,000 bonus miles, which can be redeemed for a $750 statement credit that can be used to cover any travel-related charges on your bill.
#2. Capital One Venture X Rewards Credit Card
People who travel a lot, spend a lot, and have good credit should get the Capital One Venture X Rewards Credit Card. For starters, Venture X offers a 75,000-mile bonus after spending $4,000 in the first three months. Cardholders also earn 10 miles for every $1 spent on hotels and rental cars booked through Capital One Travel, 5 miles for every $1 spent on flights booked through Capital One Travel, and 2 miles for every $1 spent on all other purchases. It costs $395 per year, which will be too much for many people who want to apply.
#3. U.S. Bank Altitude® Connect Visa Signature® Card
The U.S. Bank Altitude® Connect Visa Signature® Card is one of the best travel credit cards for people with excellent credit because it has a $0 intro membership fee for the first year and an annual fee of $95 beginning the second year your account is open, as well as the possibility of a high APR. There is also a 0% foreign transaction fee.
#4. Chase Sapphire Preferred® Card
Spending at least $4,000 in the first three months of your account will result in a 60,000-point rewards bonus. This can be redeemed for $750 in Chase travel or $600 in statement credit. You’ll also get 5 points for every dollar spent on Chase travel, 2 points for every dollar spent on all other travel purchases, 3 points for every dollar spent on dining and online grocery purchases, 3 points for every dollar spent on select streaming services, and 1 point for every dollar spent on everything else. The annual fee for this card is $95. Its ongoing rewards in non-bonus categories are also disappointing.
#5. Discover it® Miles
Discover it® Miles is the best travel credit card with no annual fee. It offers 1.5 miles for every $1 spent on all purchases, plus a bonus equal to all rewards earned during the first year. Discover it® Miles has a 0% foreign transaction fee in addition to its $0 annual fee.
#6. Citi Premier® Card
The Citi Premier® Card comes with an introductory bonus of 80,000 points after spending $4,000 in the first three months. That bonus is worth $800 in thankyou.com gift cards. Cardholders also earn three points for every dollar spent at restaurants, supermarkets, and gas stations, three points for every dollar spent on air travel and hotels, and one point for every dollar spent on all other purchases. Travelers with good or better credit, which is required to get an account, could save a lot of money with these rewards. Furthermore, there is no foreign transaction fee with this card. The annual fee for Citi Premier is $95 and the regular APR is high.
#7. PenFed Platinum Rewards Visa Signature® Card
The PenFed Platinum Rewards Visa Signature® Card is the best rewards credit card for car travel because it offers 5 points per $1 spent on gas. The PenFed Platinum Rewards card also has a welcome bonus of 15,000 points if you spend $1,500 in the first three months. This card has no annual fee and also has a 0% foreign transaction fee.
Read Also: How To Cancel Capital One Card: A Complete Guide
Amazon Credit Card Annual Fee
The Amazon Prime Rewards Visa Signature Card is a must-have for frequent Prime shoppers, with impressive reward categories and benefits for a store-branded credit card that has no annual fee. However, if you prefer retail stores other than Amazon and want a little more versatility, you should look elsewhere.
Overview of the Amazon Prime Rewards Visa Signature Card
The Amazon Prime Rewards Visa Signature Card is one of the best credit cards for online shopping because of its high reward rates on Amazon purchases, no spending limits, no annual fee, and Visa Signature benefits.
This card will give you a lot of bang for your buck if you spend around $2,800 (preferably more) at Amazon and Whole Foods. When used to its full potential, you can easily recoup the cost of your Amazon Prime membership while also reaping other significant benefits, such as surprisingly comprehensive travel and purchase protection.
Amazon Prime Rewards Visa Signature Card Highlights
- Store and rewards cards
- Annual fee: $0, but you must be an Amazon Prime member. Membership costs $139 per year ($69 for students).
- Sign-up bonus: Amazon occasionally provides gift cards in various denominations upon approval.
Rewards:
- 5% back on Amazon.com and Whole Foods Market purchases.
- 2% cash back at restaurants, gas stations, and pharmacies.
- 1% off all other purchases
- APR: The ongoing variable APR is 16.49%-24.49%.
- There are no foreign transaction fees.
Other advantages include:
- Travel protections include travel accident insurance, lost luggage reimbursement, baggage delay insurance, travel and emergency assistance, car rental collision damage waiver, and roadside assistance.
- Shopping safeguards: extended warranty and purchase protection
- In addition, Visa Signature concierge service and access to the Visa Signature Luxury Hotel Collection are included.
How can I get rid of the annual fee on my credit card?
Here is how to get your annual fee waived on your credit card:
- Contact your credit card company.
- Determine whether your card issuer will waive the fee in exchange for card usage.
- Request that your issuer matches another offer.
- Request a cancellation.
- Make use of military benefits.
- Change to another card.
- Earn rewards to compensate for the fee.
- Apply for a card with no annual fee.
How do you pay an annual fee on a credit card?
The annual fee will appear as a lump sum charge on your credit cards statement once a year. You’re usually charged the month you sign up for the card, and then every 12 months after that. The annual fee will be charged in the same manner as regular purchases on your statement.
Why do I pay an annual fee for a credit card?
Card companies charge annual fees to cover the costs of providing cardholders with numerous features and benefits. They couldn’t provide free annual $300 travel credits, Global Entry and/or TSA PreCheck credit, or competitive rewards programs.
Which is the best credit card without an annual fee?
Best Credit Cards with No Annual Fees in October 2022:
- Chase Freedom Unlimited®: The best rewards card with no annual fee.
- Chase Freedom Flex: Best for earning cash back on a variety of purchases.
- Citi Custom Cash Card: The best card for personalized rewards.
- Capital One Platinum Credit Card: This card is ideal for credit builders.
Conclusion
An annual fee is not charged by every credit card. However, depending on your requirements, you may find that those that do are worthwhile due to the benefits and rewards provided. Before you apply for a credit card, consider whether the annual fee is appropriate for your spending habits and lifestyle. Finally, you must decide whether the value of the card’s rewards and other features outweighs the fee.
Credit Card Annual Fee FAQs
Do you have to pay an annual fee for a credit card?
An annual fee is not charged by every credit card. However, depending on your requirements, you may find that those that do are worthwhile due to the benefits and rewards provided. Before you apply for a credit card, consider whether the annual fee is appropriate for your spending habits and lifestyle.
Why does my credit card have annual fee?
Why do credit card companies charge annual fees? Card companies charge annual fees to cover the costs of providing cardholders with numerous features and benefits. They couldn’t provide free annual $300 travel credits, Global Entry and/or TSA PreCheck credit, or competitive rewards programs.
How can I get rid of my credit card annual fee?
The most drastic way to avoid paying an annual fee is to cancel your card entirely. Most credit card companies allow you to cancel your card within 30 to 60 days of receiving the annual fee bill and receive the fee back as a statement credit.
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