Some annual credit card fees are far outweighed by the benefits that the card can offer. From juicy cash-back rewards to hefty travel perks and even insurance coverage. However, for people who do not spend big with their credit cards or who do not travel often, an annual fee can just be one more hole to throw wasted money into. Whether or not you have good credit or bad credit, the factors that determine the value of annual fees will be the same. Below are the major factors in deciding whether or not an annual fee is the right option for you.
Insurance Benefits
Credit cards are sometimes the most effective means of getting high quality travel insurance for free. For annual fees as low as $100, you can get coverage for more then you think. Like trip cancellations, lost or delayed luggage, delayed flights, travel medical insurance, car rentals, purchase protection, extended warranties and price protection.
The benefits of coverage for trip cancellation can easily be worth far more than the $100 fee just on its own. If you rent a car, the insurance will cost at least $30 per day, meaning 4 days of car rentals have already paid for your fee and more. If you make use of your insurance benefits, they can be worth many times over the annual fee that you pay for your card.
Travel Perks
Many credit cards with annual fees offer travel perks that can far outweigh the yearly cost. Companion airline tickets, free access to airport lounges, free hotels, roadside assistance and elite hotel status are just some of the common travel perks offered that are easily worth far more than the annual fee on the card. As long as you are someone who travels often and would spend for the comfortable perks anyway, then that annual fee is easily paid for many times over.
Cash-Back
Many cards with annual fees offer cash-back rewards for spending past certain thresholds using your card. Say that you get 4% cash back on all spending at grocery stores and gas stations. In this example, you would only need to spend a reasonable average of $50 at the gas station and $200 at the grocery store each week to net over 4 times a yearly annual fee of $100. People who spend a lot using their credit card stand to make significant sums thanks to the cash-back rewards offered by many cards with annual fees.
