Annual fee, this is one term that for many credit card users will leave a sour taste in their mouth. Most people tend to think of an annual fee in a negative light. Yet millions of Americans use credit cards that indeed carry an annual fee. Why you might ask? The reason is simple, for these people, the perks of owning the credit card completely negate having to pay an annual fee. For these credit card users, they place the highest value on a credit cards perks, even if these credit cards carry an annual fee. Many of these people will pursue a credit card with high value perks as well as a rewards program, knowing full well that they can recoup their annual fee with the rewards that the credit card offers, meanwhile they get to reap the benefits of the perks that the card offers. So what perks exactly do these customers value enough to shell out an annual fee? Lets examine these perks that might have you say yes to a credit card with an annual fee as high as $100 for an average card or as high as $500 for a premium rewards card.
If you have flown at all in recent years, you are well aware that airline carriers are trimming down comforts and amenities, which were at one time standard for consumers. Now a days they charge you for every little thing, which can quickly add up to hundreds of dollars for things like checked bags. Many airlines however work with credit card companies to offer travel perks for card holders. It is common for these co-branded cards to offer free checked bags, which on one round trip alone can easily equal between $100 and $200 per trip. The savings alone would wipe out paying the annual fee if said annual fee was $100. For someone taking 5 or more flights per year, they could afford to pay a $500 fee for an ultra premium credit card, just based off of the checked bag savings. These cards also tend to offer other things such as priority boarding and free passes to airport lounges, which make traveling easier and more comfortable.
Airline Fee Credits
Similar to the travel perks above, some credit cards offer airline fee credits. These airline fee credits can save you the amount that it costs for the credit cards annual fee, or knock out a large chunk of it. The city Prestige card offers a $250 airline fee credit every year for example. This airline fee credit can be used to offset any fee an airline would charge. The city Prestige card carries an annual fee of $450, but if you travel then over half of this annual fee is wiped out with just this one perk, but the city Prestige card offers other money saving perks as well.
These cards almost always have annual fees involved, though many of them will waive this fee for your first year of owning the card. If the card offers rich rewards, you can easily meet the cost of the rewards card via spending and cashing in your earned rewards. These cards always offer other perks, many of them include cash saving travel perks. For example with the Blue Cash Preferred® Card from American Express, you can earn 6% cash back when buying groceries, with a cap of $6000 spent on groceries, and you also get 3% cash back at gas stations and select department stores, which can easily make up for the annual fee, which only equals $75. The no fee alternative card from AMEX, the Blue Cash Everyday® Card, has the rewards cut down to only 3% on groceries, which equals loosing out on $180 in cash back each year on groceries, which is a high value as compared to the measily $75 annual fee.