What Is a Credit Card Annual Fee?
7 Min Read | Last updated: January 7, 2025
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
The benefits and rewards of a credit card can be worth more than the annual fee. Discover if paying a credit card annual fee is worth it for you.
At-A-Glance
- Many credit cards charge an annual fee, which can range from around $95 up to $695 or more, depending on the card.
- Although no annual fee cards are available, these cards may include fewer card benefits.
- When deciding whether a card with an annual fee is worth it for you, you may want to carefully consider the features and benefits of the card.
In this article, we’ll explore what an annual fee is and show you how you can assess whether a card with an annual fee is worth it for you.
What Is a Credit Card Annual Fee?
A credit card annual fee is a charge that credit cards can have. The fee may be charged in full when you open your account and then once a year in your anniversary month. An annual fee can vary significantly, depending on the card and its benefits, ranging from $95 up to $695 or more.1 Cards on the higher end of the spectrum may offer the most benefits. But there are also many no annual fee credit cards available today as well.
Why Do Credit Cards Charge an Annual Fee?
Cards that charge an annual fee can often come with perks like rewards programs, travel benefits, or other features. These can offset the cost for some card holders, especially those who use their card frequently, or who enjoy access to the features and benefits.
Is It Worth Paying a Credit Card Annual Fee?
An annual fee can be worth it, depending on your needs and preferences. Whether it’s worth paying a credit card annual fee depends on several factors, including:
- Rewards and Benefits
If the rewards program offers significant cash back, points, or other benefits that you appreciate, then it could be worthwhile paying for a card with an annual fee.
- Travel Benefits
Some cards may offer travel benefits, like complimentary access to certain lounges, a free checked bag, and priority on select upgrades. Some credit cards may even offer a statement credit for Global Entry or TSA Precheck®, which could help you to get through airport checkpoints faster.
One example of a credit card that offers all the above is the Delta SkyMiles® Reserve American Express Card. If you travel frequently, these features could make a more premium credit card with an annual fee worth it for you.
- Your Spending Habits
You may want to consider how much you plan to spend on the card, and what type of purchases you may be making. If your typical purchases are eligible for cash back or points, and you plan to charge enough to the card so that the rewards you may earn can offset the fee, then paying an annual fee could be worth it.
- Additional Features
You may want to look at what else the card offers. Some cards offer purchase protection, extended warranties, or access to exclusive events. If these features align with your needs, they could make that card with an annual fee worth considering.
- Fees vs. Savings
You may want to compare the annual fee to potential savings. For example, if a card offers travel insurance or no foreign transaction fees, it could save you money on trips.
- If You Have Subprime Credit
If you are working on building or rebuilding your credit, and can’t get approved for a traditional credit card, you may be able to get a credit card designed for subprime credit. These cards may charge an annual fee.
- Available Alternatives
You may want to research other cards that don’t charge annual fees. If you find similar benefits without the cost, that might be a better option.
Running the Numbers on Credit Card Annual Fees
In some cases, you can make the best decision by getting out the calculator and doing some math.
For example, let’s consider two cash back rewards cards offered by the same company:
| Card 1 | Card2 |
|---|---|
| No annual fee | $295 annual fee |
| 3% cash back at supermarkets | 6% cash back at supermarkets |
| 2% cash back at gas stations and some department stores |
3% cash back at gas stations and some department stores |
For this example, we’re going to take our estimated weekly grocery spend, divide it by 6% (or .06) and multiply it by 52 weeks to see what our annual cash back on groceries would be.
In this case, let’s say we’re spending $100 per week on groceries. 100 x .06 = $6 per week.
Now, multiply $6 by 52 weeks to get an annual total of $312. When you work out the math, you discover that using these examples, even after paying the annual fee you may still come out ahead as long as you spend at least $100 a week on groceries. If you don’t, the no annual fee credit card may be the better choice for you.
Example of a Credit Card With an Annual Fee
You might want to run the numbers on travel credit cards, too. At one end of the spectrum are cards branded for airlines or hotel chains. These cards may charge annual fees of $150 or more. Although the rewards you earn may be limited to the partner brand, the annual fee may still be a good deal. Plus, some cards (like the example below) may waive the annual fee for the first year.
For example: the Delta SkyMiles® Gold American Express Card has no annual fee for the first year (then $150 after that)2 and offers benefits like:
- $200 Flight Credit: Earn a $200 Delta Flight Credit toward your next trip after spending $10,000 in purchases on the Card in a calendar year.
- TakeOff 15: Take 15% off anytime you book Award Travel with miles on Delta flights when using delta.com and the Fly Delta app. (Discount not applicable to partner-operated flights or to taxes and fees.)
- First Checked Bag Free: Enjoy your first checked bag free when flying Delta.
- Priority Boarding: Receive Zone 5 Priority Boarding on Delta flights.
- $100 Delta Stays Credit: Get up to $100 back per year as a statement credit after using your Card to book prepaid hotels or vacation rentals through Delta Stays on delta.com/stays.3
Other travel credit cards may have different annual fees and offer varied benefits. These may include multiple statement credits, airport lounge access, and preferred member status at branded hotels. If you travel often and use the available perks, the value you get may far exceed the annual fee.
A final point on the math: Don’t forget to consider interest charges as well if you’re planning to carry a balance on the card.
Not sure which credit card is right for you? Learn more about American Express Card Levels: Compare different American Express Credit Card offerings, and annual fees, to find a card that’s right for you.
Frequently Asked Questions
You may pay an annual fee on a credit card once a year. The fee may be charged upon opening the account and it can automatically renew each year.
Some American Express cards have an annual fee. The amount varies, depending on the card and its benefits. Cards with higher fees may offer more extensive rewards programs, travel perks, and other valuable features.
One American Express cards without an annual fee is the Amex Blue Cash Everyday® Card. This card offers cashback rewards on everyday purchases, such as groceries and gas, with no annual fee. Other no-fee options are the Hilton Honors American Express Card and the Delta SkyMiles® Blue American Express Card.
The Takeaway
Credit cards with annual fees can often represent good value, depending on your needs and preferences. When weighing up different credit cards, you may want to consider your available options carefully to ensure that you end up with a card that’s right for you.
1 “Credit Cards: Should You Ever Pay an Annual Fee?,” Investopedia
2 For more on Rates and Fees for the Delta SkyMiles® American Express Gold Card, click here.
3 For more on Benefit and Offer Terms for the Delta SkyMiles® American Express Gold Card, click here.
Allan Halcrow is a freelance writer concentrating in business, human resources, and diversity and inclusion. He is also the author of four books on management.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
