Why I Finally Signed Up for a Credit Card With an Annual Fee

by Christy Bieber | Updated July 21, 2021 - First published on April 23, 2020

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A woman sitting at a patio table and paying a waitress with her credit card.

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I did the math and discovered it was worth it.

With so many great credit cards out there, I never thought it was worth paying an annual fee. After all, why should I pay a credit card company to do business with me when there were plenty of other card issuers out there competing for my dollars and charging no fee at all?

Recently, however, I re-evaluated this position. I found a great credit card that was an ideal fit and when I did the math, it was well worth the $95 annual fee that I had to pay. I bit the bullet, paid the fee, and I'm more than glad I did. Here are a few key reasons why. 

The card offers benefits I'll actually use

Many credit cards with annual fees offer perks such as airline lounge access or waived rental car insurance fees, but these perks have never appealed to me. My family and I tend to be people who get to the airport just in time for domestic flights, and we like to spend time shopping and exploring airports when waiting for international planes to depart, so lounge access never seemed all that exciting. We also rarely check bags, so cards offering to waive the baggage fees weren't attractive either.

The card I have now, though, offers some perks I'll actually take advantage of. I got a statement credit to sign up for Global Entry, which I've used already, and a credit for in-flight purchases, which works well because I always buy access to the Wi-Fi. 

Since the benefits were a good match for me and the statement credit for in-flight purchases or Global Entry each covered the annual fee on their own, paying for the card made sense. 

If you're evaluating your own card with an annual fee, don't get blinded by promises of glamorous benefits. Think carefully about whether you'll actually make enough use of them to justify paying for them. 

The generous bonus rewards offset the fee

When I first signed up for my credit card with the annual fee, I got a $500 bonus reward for spending $3,000 in the first few months. I had already calculated that I'd hit the spending requirement for the bonus and rationalized that the bonus would cover my fees for five years even if I didn't take advantage of any of the cardholder benefits I planned to use. 

If you know you'll meet the bonus spending requirements, earning miles, points, or cash back after opening the card could be a good way to offset the cost of it.

The extra rewards more than make up for the fee

In addition to the sign-up bonus and perks, there's a third way the card will pay for itself. As I have other banking and investment services with my card issuer, I qualify for bonus rewards that push my cash back rate above 2% for everyday purchases and above 3% for dining and travel purchases. These rewards rates are well above what I can get with most other cards since I don't want to deal with a card offering rotating rewards categories.

Since I tend to pay for almost everything with my credit card, the higher rewards rate means that my annual fee is easily covered. In fact, I end up with a few hundred dollars more in rewards per year than I'd get from any other card -- even after subtracting the amount I have to pay to be a cardmember. 

To figure out if a generous rewards program justifies a fee for you, think about how much you spend and compare the rewards with a free card. For example, if you spend $10,000 a year on your credit card and are deciding between a card with a $95 annual fee and 2% back or a card with no annual fee and 1% back, start by figuring out how much extra you'd get in rewards with the card you have to pay for. In this case, it would be $100. So you'd offset the $95 annual fee and end up $5 better off. 

Is a card with an annual fee a good choice for you?

While I'm glad I finally signed up for a card that charges an annual fee, paying to become a cardmember isn't necessarily the right choice for everyone. The key is not to discount cards with a fee right off the bat just because they seem expensive. Take a close look at what each card offers, compare it to other free alternatives, and see if a card with a fee offers a good value for you. You may just find, like I did, that paying the fee is well worth it.

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