Are Credit Cards With Annual Fees Worth It? Here’s How to Decide
- Jennifer Finn
- Oct 19
- 5 min read
If you’ve ever been shopping for credit cards, you’ve probably noticed that some come with annual fees. And maybe your first reaction was, “Why would I pay for a card when I can get one for free?” It’s a fair question. But the truth is, a card with an annual fee can sometimes be worth it—sometimes very worth it—if you use it strategically.
What Are Annual Fee Credit Cards?
Annual fee cards are simply credit cards that charge a yearly fee for the privilege of holding the card. Fees can range from $95 to several hundred dollars. At first glance, they may feel like a dealbreaker—but many of these cards come with benefits that, when used properly, more than offset the cost of the fee.
Why Banks Charge Annual Fees
Banks and credit card issuers aren’t charging these fees just to be annoying. Usually, cards with annual fees offer perks that free cards don’t:
Higher rewards rates: 3x, 4x, or even 5x points on categories like travel, dining, or groceries.
Travel perks: Free airport lounge access, airline credits, hotel elite status, or travel insurance.
Sign-up bonuses: Often worth hundreds of dollars in points or cash back.
Premium benefits: Concierge services, extended warranties, purchase protection, and more.
When an Annual Fee Card Might Be Worth It
The key is understanding how you’ll actually use it. Here’s how to think about it:
You can offset the fee with rewards. If the card earns you more in points, miles, or cash back than the fee costs, it can be financially worthwhile.
Everyone eats—so dining and grocery rewards matter. Many annual fee cards offer bonus points for dining or grocery spending. Nearly everyone spends in these categories, so even moderate monthly spending can generate enough points to justify the fee.
You value the perks—especially lounge access. Airport lounges aren’t just about status—they’re real savings. They often include complimentary food and drinks, usually better than airport restaurants, with less crowding and better service.
Real-world example: We have the Capital One Venture X, which includes Priority Pass lounge access for the cardholder and two guests. By adding me as an authorized user to Tom’s account, our entire family of four could access lounges. On our 10-flight trip to Asia this summer, we visited lounges 7–8 times, feeding all four of us each time. Buying the same food at airport restaurants would have cost $50–$100 per visit, totaling $500–$800—more than covering the $395 annual fee.
Sign-up bonuses can offset the first-year feeMany premium cards offer large bonuses that can exceed the annual fee in value, especially if you can meet the minimum spending responsibly.
You’re disciplined about paying your balanceAnnual fee cards only make sense if you avoid paying interest, which can wipe out the value of rewards and perks.
Using the Amex Gold as an Example
The American Express® Gold Card illustrates how an annual fee card can pay for itself through rewards, credits, and everyday spending.
Why it works:
Everyone eats—so dining and grocery rewards matter. The Amex Gold earns 4x points at restaurants and U.S. supermarkets, categories nearly everyone hits every month. Whether you dine out, order takeout, or shop for groceries, these points add up fast. Even $1,000 per month on dining and groceries generates 48,000 points a year, worth over $1,000 when redeemed strategically.
Practical redemption example: A round-trip flight from Miami to Montreal in economy costs ~25,000 points through Air Canada’s Aeroplan program. The points earned from a year of everyday spending could cover a full round-trip flight, with points left for a future trip.
Monthly, semi-annual, and retailer credits reduce the net fee. The Amex Gold includes:
Uber Cash: $10/month ($120/year)
Dining Credit: $10/month ($120/year) at partners like Grubhub and The Cheesecake Factory
Dunkin’ Credit: $7/month ($84/year). You can load it onto a reloadable digital gift card, which is perfect if you don’t go to Dunkin’ often—or want to save for a family outing. The $7 posts to your Amex Gold within a couple of days of loading.
Resy Credit: $50 twice a year ($100 total). No reservation required—just pay at a participating restaurant with your Amex Gold.
Retailer Credits: Occasional offers at partners like Best Buy or Saks Fifth Avenue.
Combined, these credits can total $524+ per year, effectively reducing the $325 annual fee to zero—or even giving a net gain.
Sign-up bonus covers the first-year fee and then someUp to 100,000 Membership Rewards points after spending $6,000 in 6 months, worth ~$2,200. This demonstrates how a first-year bonus alone can make an annual fee card effectively free.
The strategy is in combining perks and everyday spendingThe card’s points, credits, and bonuses illustrate a broader principle: if you align your spending and redeem strategically, annual fee cards can provide far more value than free alternatives.
Annual Fee Cards: Cost vs. Value
🧠 Key Takeaways
Annual fees are not automatically a dealbreaker—they signal higher-level rewards and perks.
Look at your existing spending patterns: dining, groceries, travel, rideshare, and retailers.
Consider perks beyond points: lounge access, statement credits, and transfer bonuses.
Calculate the net value: rewards + credits + sign-up bonus – annual fee. If it’s positive, the card can be worth it.
The Amex Gold shows how a card with a $325 annual fee can effectively pay you to use it when you maximize points, credits, and everyday spending. That’s the core principle behind why many annual fee cards are worth considering.
Your Turn
Have you found an annual fee card that’s truly worth it?
Do you focus on rewards, travel perks, or statement credits when choosing a card?
Which spending habits or categories help you get the most value from your cards?
For beginners, which card would you try first to maximize benefits?
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