5 Credit Card Perks That Make Annual Fees Worth It

When I started using credit cards, an annual fee was a deal-breaker. The idea of paying for a credit card was absurd to me. Like a lot of people, I didn't see the point of paying to let a credit card company lend you money.

Since then, my opinion has done a 180. Last year, I paid over $1,000 in annual fees for some of the best credit cards -- and I got my money's worth. If you've always ruled out cards with annual fees, you may want to give them a chance. They cost you more upfront, but certain card perks can easily make up for that.

1. Higher rewards rates

Credit cards with annual fees tend to offer more rewards on your spending. They may have more bonus categories and higher rates in those bonus categories. Those extra rewards could outweigh the cost of an annual fee.

Two American Express cards provide the perfect example. The Blue Cash Everyday® Card from American Express earns 3% cash back at U.S. supermarkets, up to a spending cap of $6,000 per calendar year. Terms apply. It doesn't charge an annual fee (see rates and fees). That means you could earn $180 in cash back just from U.S. supermarket spending, which is a great return.

Click here to apply for the Blue Cash Everyday® Card from American Express.

But the Blue Cash Preferred® Card from American Express earns a whopping 6% back at U.S. supermarkets, up to the same $6,000 yearly spending cap. Terms apply. The difference is that it has an annual fee. There's a $0 intro annual fee for the first year, then $95. (See rates and fees.) If you're going to max out the bonus cash back by spending $6,000 at U.S. supermarkets, you'd be better off with this card, because you'd earn $360 cash back in that category. For a $0 intro annual fee for the first year, then $95. annual fee, you get $180 more cash back.

Click here to apply for the Blue Cash Preferred® Card from American Express.

2. Bigger welcome offers

Lots of credit cards have welcome offers for new cardholders. Once again, this is an area where credit cards with annual fees normally offer much more.

Among no annual fee credit cards, the best welcome offers I've seen range from $200 to $300 in value. The Wells Fargo Autograph℠ Card (see rates and fees) has one of the more lucrative, with a limited-time 20,000 bonus points for spending $1,000 within 3 months of account opening. Those 20,000 bonus points have a cash redemption value of $200.

Click here to apply for the Wells Fargo Autograph℠ Card.

That's certainly impressive, considering you don't need to pay an annual fee for that card. But for a $95 annual fee, you could get the Chase Sapphire Preferred® Card. It offers $300 Chase Travel℠ Credit + 60,000 bonus points for spending $4,000 in the first 3 months. If you use those points to book travel in the Chase Travel portal, you get a value of $0.0125 per point. At that value, $300 Chase Travel℠ Credit + 60,000 bonus points are worth $750.

Click here to apply for the Chase Sapphire Preferred® Card.

3. Spending credits

High-end credit cards can carry annual fees of $400, $500, or more. Your first reaction might be "How could a credit card ever be worth that much money?" One of the main reasons is spending credits.

A spending credit covers the cost of a specific type of purchase. More expensive credit cards offer these to balance out their annual fees. For example, the Chase Sapphire Reserve® has an expensive $550 annual fee. But it also has a $300 annual travel credit, meaning it covers your first $300 per year in travel purchases.

If you use that credit, then the card really costs you $250 per year. That's still a lot, but it's more reasonable when you consider all the other travel perks you get with it.

Click here to apply for the Chase Sapphire Reserve®.

4. Free night awards at hotels

Hotel credit cards come in the annual fee and no annual fee variety. To be honest, I almost always recommend skipping hotel cards with no annual fee. The ones with annual fees offer so much more, and many get you an annual free night award.

The Marriott Bonvoy Boundless® Credit Card is an excellent example. It has a $95 annual fee, but every year after your account anniversary, this card gets you a free night award. You can use it for one night at any Marriott Bonvoy property with a redemption level of up to 35,000 points. There are plenty of properties in this range that cost $100 to $200 per night or more, making it easy to come out ahead.

Click here to apply for the Marriott Bonvoy Boundless® Credit Card.

5. Airport lounge access

If you're a frequent flyer, there are quite a few travel credit cards with airport lounge access. With most cards that offer this feature, you get unlimited access to lounges in a specific program, typically Priority Pass.

When it comes to lounge access, The Platinum Card® from American Express is tough to beat. It offers access to several lounge programs, including Priority Pass (enrollment required) and The Centurion Lounges. Terms apply. It's not cheap, with a $695 annual fee (see rates and fees). Still, if you travel by air several times per year and lounge access is important to you, this card could be a great pickup.

Click here to apply for the The Platinum Card® from American Express.

The best way to decide if an annual fee is worth it is to review its perks and ask yourself which ones you're sure to use. If a card has lots of benefits that you'll use, and you value them more than the cost of the annual fee, then don't let that annual fee keep you from applying.