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Whether we like it or not, many of the best rewards and travel credit cards charge annual fees. These fees can easily surpass $500 for credit cards with the most premium perks, although there are often lower-fee and no-annual-fee options that earn similar rewards.
What is an annual fee? True to their name, credit card annual fees are charges consumers pay to have certain types of credit cards in their wallets.
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Are credit cards with annual fees worth it? For the most part, a credit card annual fee can fall somewhere between "not worth it at all" and "totally worth it." It all depends on the individual consumer, how valuable a card's benefits are, and how often the cardholder will use their card's rewards and perks.
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When credit card annual fees are worth it
Julian Kheel, a rewards expert and the founder of Points Path, a tool that compares cash and miles flight prices, says that many consumers are naturally wary of credit card annual fees. With so many $0 annual fee credit cards out there, voluntarily paying an annual fee can seem silly at best, or even wasteful.
"But some of those same people will turn around and pay twice as much each month for a Netflix subscription that doesn't show ads versus one that does," he points out. "In other words, it makes sense to pay a credit card annual fee if you're getting something that you value for it."
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How do you determine value?
Kheel says you can do this with credit cards by estimating a card's benefits and comparing what you get to the total cost of the annual fee. He adds that some perks are easy to value.
For example, Kheel says he regularly flies with American Airlines, usually with a companion, and his travel party typically checks a bag on those flights.
"That means we'd each pay at least $140 a year in checked bag fees, or a total of $280 for the two of us, since the fee for each bag is $35 in each direction of a round-trip," he says.
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However, American's mid-tier credit card gives you and up to four companions on the same reservation a free checked bag on every flight. Since card membership costs just $99 per year, paying this annual fee is worth it in Kheel’s scenario.
Many of the best travel credit cards also come with airport lounge access, which you can purchase outright. For example, Priority Pass membership with unlimited visits costs $469 annually on the Priority Pass website.
If you use airport lounges enough that you might otherwise pay for a lounge membership, you can use that fact to justify a credit card's annual fee along with other benefits you get.
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You may be wasting your money if
There are also situations where annual credit card fees aren't worth it. For example, picking up a travel credit card with a pricey annual fee will rarely ever pay off if you never travel.
John Cabell of J.D. Power, who served as lead of the 2024 U.S. Credit Card Satisfaction Study, says another type of consumer who shouldn't pay annual fees is someone with irregular credit card usage patterns that mean their credit card rewards would be limited. The same is true for "those who have fewer, mostly smaller dollar transactions," he says.
Kheel also points out that people who never travel can pick up a cash-back credit card instead. Many of the best cash-back credit cards on the market don't charge annual fees anyway, so consumers can use their cards as they wish without having to justify the cost each year.
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"It keeps things simple, and you'll earn something back on everything you buy without having to work very hard for it, or having to pay extra for the privilege," Kheel says.
If you have an annual fee credit card that isn't worth it, Kheel says it's probably time to cancel. This can be the case if you have a card that offers travel rewards but aren't traveling as much as you used to or if the bonus categories on your card no longer match your regular spending patterns.
You may even be able to cancel the credit card and get the fee refunded after it's billed, at least for up to 30 days.
"Most people don't remember when their annual fee is due each year and forget about it until they see the charge on their statement, and then assume it's too late to cancel," Kheel notes.
However, seeing that charge is actually a perfect time to decide whether to keep the card or not. Then, call your bank to either cancel or see if they can offer you something extra for the upcoming year. You may also downgrade a card with an annual fee to a no-fee version. Most of the time, you just need to call your card issuer and ask.
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