Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more.
Rewards credit cards help you earn points or miles to redeem for free travel, cash back and merchandise every time you swipe your card — making sure you get the most value for your money.
However, some great perks often come with high annual fees (in some cases, near $1,000) and paying a fee may not be worthwhile for everyone. Here's what everyone should ask themselves before getting a card with an annual fee.
What to consider before getting an annual-fee card
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Earn a one-time bonus of 75,000 miles
Terms apply.
Earn a bonus of 20,000 miles once you spend $500 on purchases within 3 months from account opening, equal to $200 in travel
$0
1. Do you use your existing credit cards responsibly?
First, think about your experience with your existing credit cards.
Cards with annual fees usually require you to do more than pay your bill on time each month.
For example, you'll probably need to spend in specific categories to earn bonus points; you will also need to figure out how to maximize your point redemption and take extra steps to make sure that any insurance perks or subscription discounts are activated.
This is a lot to juggle, so be sure to have the basics down before spending money on a card. Ask yourself:
- Do you pay your bill on time each month?
- Do you avoid spending more than you can pay off within the pay cycle?
- Do you keep track of your points and perks
"If you're just getting started with your credit journey and you aren't confident that you can use credit responsibly, start out with a standard secured card or a student card to get into the habit of being a responsible credit user first," CFP Tara Falcone, founder of the financial literacy program ReisUp, tells CNBC Select. "Once you feel convinced you can handle credit responsibly, you can look for cards with additional perks."
2. Will you actually use the perks offered by the card?
Consider your lifestyle first before opening a card. This way, you can avoid feeling like you're paying an annual fee for things you may not care about or have a use for.
Let's say you have a large family and spend a ton each month on groceries, for example: A credit card that gives rewards points or cash back for supermarket purchases — plus a yearly credit for groceries — might be a better fit for the purchases you already make than a travel credit card that rewards you when you buy airline tickets, for example.
If you travel and order out most of the time, then it may make more sense to pay for a credit card that primarily offers travel perks, such as free checked bags, hotel elite status, airport lounge access or rideshare credits.
3. Can you afford to use the card enough to get the perks?
Many card issuers often offer a welcome bonus that requires you to spend a certain amount within the first three to six months of opening the card to earn the bonus points.
Before you open a card like that, consider how much you typically spend on your card each month — only get the card if your spending already exceeds the amount needed to earn the bonus.
"People approach rewards credit cards from the perspective of, 'How much should I spend to get this perk?' And that's the wrong way to approach it," Falcone says. "The healthier way to approach this is, 'How quickly will I recoup this fee just through my standard living and spending habits?'"
For example, the American Express® Gold Card, which has a $325 annual fee (see rates and fees), may offer as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new card within the first six months of card membership*. Terms apply.
The American Express Gold Card is great for earning valuable Membership Rewards® points at restaurants worldwide and U.S. supermarkets.
- You can earn $400+ in dining and rideshare credits every year (Enrollment required for select benefits mentioned)
- Exceptionally rewarding for eligible restaurant and U.S. supermarket purchases
- No foreign transaction fees
- Larger annual fee
- Credits are more complicated, you earn them monthly or semi-annually
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you're approved and find out your exact welcome offer amount – all with no credit score impact. If you're approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You'll know upfront exactly how much you'll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That's up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
- See Rates & Fees
Foreign transaction fee
None
Some people may easily spend $8,000 over six months with everyday purchases, but for others, it could be well above their usual budget. You want to avoid having to look for purchases just to meet the spending goal.
4. Is the value of the perks greater than what you spend on fees?
Always make sure you're earning more value in perks than you are spending in fees and interest.
So, if you're paying a $500 annual fee but the value of the perks you're receiving doesn't equal or exceed $500, then a card with this fee is probably not worth it. Pretty simple math.
Sometimes, it's easy to tell the value of the perks because it's a one-to-one ratio. The Chase Sapphire Reserve (see rates and fees), for example, offers a $300 travel credit as reimbursement for travel purchases charged to your card each account anniversary year, which can help offset the card's large annual fee.
The Chase Sapphire Reserve® is a standout premium credit card with plenty of luxury perks and statement credits to justify its annual fee.
- Access over 1,300 airport lounges worldwide with a complimentary Priority PassTM Select membership, plus every Chase Sapphire Lounge® by The Club with two guests.
- Up to $300 in annual travel credit each account anniversary year
- You can transfer rewards to all of Chase's travel partners including World of Hyatt, Southwest Rapid Rewards and many more
- Top-tier travel and shopping protections
- High annual fee
- Requires a high credit score
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn 150,000 bonus points after you spend $6,000 on purchases in the first 3 months from account opening.
- Get $3,000 in annual value with Sapphire Reserve.
- Earn 8x points on all purchases through Chase TravelSM, including The EditSM and 4x points on flights and hotels booked direct. Plus, earn 3x points on dining worldwide & 1x points on all other purchases
- $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year.
- Access over 1,300 airport lounges worldwide with a complimentary Priority PassTM Select membership, plus every Chase Sapphire Lounge® by The Club with two guests. Plus, up to $120 towards Global Entry, NEXUS, or TSA PreCheck® every 4 years
- Get up to $150 in statement credits every six months for a maximum of $300 annually for dining at restaurants that are part of Sapphire Reserve Exclusive Tables.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Coverage, Lost Luggage Insurance, no foreign transaction fees, and more.
- Get complimentary Apple TV+, the exclusive streaming home of Apple Originals. Plus Apple Music — all the music you love, across all your devices. Subscriptions run through 6/22/27 — a value of $288 annually
- Member FDIC
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
However, at other times, you may need to do some math to ensure that your regular spending offsets the annual fee.
"If it's a cash-back percentage, look at how much you spent on groceries, then multiply that by the percentage and see how much you'll get back on groceries," Falcone says.
For example, the Blue Cash Preferred® Card from American Express offers 6% cash back at U.S. supermarkets, on up to $6,000 per year in eligible purchases (then 1%) and has a $0 intro annual fee for the first year, then $95 (see rates and fees).
If you spent $4,000 on groceries at U.S. supermarkets last year and expect to spend a similar amount this year, you can multiply $4,000 by 0.06 to get $240 in cash back on your groceries this year.
The Blue Cash Preferred® Card from American Express is a low-fee card with generous cash-back rewards and useful ongoing benefits, such as a monthly Disney Bundle credit. (Enrollment required for select benefits mentioned)
- High cash-back earnings for U.S. supermarkets and streaming services
- Intro-APR offer for purchases and balance transfers
- No annual fee for the first year
- It's less rewarding after the first year because of the annual fee
- Bonus rewards for U.S. supermarkets are capped
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply and find out your welcome offer. As High As $300 cash back* after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply, and if approved: 1. Find out your offer amount 2. Accept the Card with your offer 3. Spend $3,000 in 6 months 4. Receive the cash back. *Cash back is received in the form of Reward Dollars that can be redeemed for a statement credit or at Amazon.com checkout.
- $0 intro annual fee for the first year, then $95.
- Enjoy 0% intro APR on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.49%-28.49%.
- Plan It®: Buy now, pay later with Plan It. Split purchases of $100 or more into equal monthly installments with a fixed fee so you don't have the pressure of paying all at once. Simply select the purchase in your online account or the American Express® App to see your plan options. Plus, you'll still earn rewards on purchases the way you usually do.
- Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at eligible U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) purchases and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
- Get up to a $10 monthly statement credit after using your enrolled Blue Cash Preferred® Card for a subscription purchase, including a bundle subscription purchase, at DisneyPlus.com, Hulu.com, or Stream.ESPN.com U.S. websites. Subject to auto-renewal.
- Terms Apply.
- See Rates & Fees
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7% of each transaction after conversion to US dollars
Keep in mind that the card's welcome bonus can sometimes be worth paying the annual fee several times over. For example, Chase offers multiple cards that offer bonuses worth more than the annual fee.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Earn 75,000 bonus points
Earn $200 cash back
See rates and fees. Terms apply.
5. Does the card offer perks that you would like to have but don't usually pay for?
Lastly, consider whether you're receiving additional perks that you wouldn't usually pay for.
"Not all value is monetary or measurable," Falcone says. "I love bougie travel, but I'm very budget-conscious and wouldn't normally pay for upgrades or lounge access. Having a card that gives me lounge access lets me rest and feel fancy. The feeling of that convenience is valuable to me even though it's not measurable."
Likewise, some cards may offer insurance for car rentals as an additional perk. Even if you only use a rental a few times per year, you'll still have that peace of mind of knowing that you're covered if anything were to happen to the car.
And if you already have a credit card with an annual fee that turned out to be a bit more burdensome than you expected, you can always try calling the card issuer to ask for a reduced fee or have it waived for a year. It isn't always guaranteed to work, but it's worth a shot.
FAQs
Why do some credit cards have annual fees?
Credit card companies make money on the fees they charge customers, including the annual fee, interest charges that rack up when you don't pay your bill in full each month and interchange fees that businesses pay every time you swipe your card.
However, the annual fee also offsets the cost of offering cardholders rewards and additional perks, like yearly travel credits or car rental insurance. And in many cases, the more perks you receive, the higher the annual fee will be.
How do I pay the annual fee for my credit card?
The annual fee will be automatically charged to your credit card statement once a year as a lump sum. You're typically charged during the same month that you sign up for the card and then every 12 months after that. You'll pay the annual fee the same way you'd pay for regular purchases shown on your statement.
Can I get the annual fee on my credit card waived or reduced?
If you're second-guessing whether your credit card's annual fee is still worthwhile, you can try asking for a retention offer. You may receive a one-time fee waiver, a lump sum of points or an offer similar to a welcome bonus where you earn rewards after spending a certain amount.
To increase your chances of receiving a retention offer, call customer service and ask for the retention department. Then plead your case to the representative and state why you no longer get full value from your credit card. This may include using other cards more, a change in your spending habits or maybe the issuer has raised the annual fee. It could take a few calls to get a retention offer, and even then you may not receive one.
If you don't receive a retention offer, you can ask to be downgraded to an alternative no-annual-fee credit card or a card with a lower annual fee. Financial experts don't recommend closing credit cards since it can potentially have a negative impact to your credit score, but there can be exceptions if the cost of the card outweighs its benefits.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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For rates and fees of the American Express® Gold Card, click here.
For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
*The American Express® Gold Card Welcome Offer: To view your personalized offer, you must first submit an application. If approved, you will: (1) receive your Welcome Offer details, (2) have the option to accept the Card with that offer, (3) be required to spend $8,000 on eligible purchases within the first 6 months of Card Membership, and (4) earn Membership Rewards® points. Welcome offers vary and you may not be eligible for an offer.
