Some credit cards don't charge an annual fee, but it is estimated that one in seven costs between $5 and $450 per year. Paying such a price when free options are available might seem like a bad idea, but when the perks of each account are considered, you could actually end up saving money.
The average fee for a credit card is about $50 - not something that many people would choose. The industry gains, too. Robert Hammer, the chairman and founder of credit card consulting and research firm, R. K. Hammer, says that annual income from credit card fees is around $11.8 billion. "The trend has been toward offering consumers more and charging them more annual fees as a result," Hammer says, adding that "the better the product, the more it's going to cost."
The perks of any given credit card could outweigh the expense, though. Some credit cards provide free access to airport lounges. For frequent fliers spending hundreds of dollars on membership, paying the annual credit card fee could be cheaper. The purchase rewards of cards with fees are often higher than no-fee cards. A no-fee card might offer 3 percent cash-back, with a card costing $95 providing it at 6 percent. For those spending at least $61 on groceries weekly, the card with the fee offers more savings.
It is vital to weigh up the options, but rejecting a credit card because of the annual fee alone could be short-sighted in some cases.
If you want more credit, check out MoneyTips' list of credit card offers.