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When it comes to credit cards, Americans don’t want to spend money playing.
A new study from GOBankingRates shows that annual fees are the most important consideration for people considering a new credit card. Over 38% cite annual fee as the most important determinant of card shopping. This is far more important than perks like low annual fees and cash back.
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Consumers instinctively hate fees, and that instinct is usually the right one. However, you can pay the annual fee yourself in the following scenarios:
Once you’ve decided what you want out of the premium cards you’re considering, step one is to shop around for cards with similar perks and no annual fees. If you find one, that should make the decision for you.Given a choice, a no-fee card is always better. But if the card you’re looking for is in a class by itself, Here are four cases where it makes sense to accept an annual fee for a card you love.
The value of the reward exceeds the price
The easiest way to determine if a fee is worth the cost is to calculate how much of a reward you will actually use. If the total exceeds the annual fee, it may be the card for you.
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Tom Koesternen, Chartered Financial Analyst at The Guaranteed Loans, used Capital One Venture X Rewards as an example of how frequent travelers can pay for themselves with a great card.
“We offer travel rewards and the miles are easy to use,” said Koesternen. “Enjoy a welcome bonus of 75,000 miles and pay a reasonable annual fee compared to other credit cards in the same category.”
Its “affordable annual fee” is $395, not a drop of the dollar for most people. However, the card’s perks include $300 annual travel credit and $100 Global Entry or his TSA PreCheck credit. These two perks alone more than cover the price.
Plus, cardholders can earn $100 bonus miles each year, 10x miles on hotel stays booked with Capital One and 5x miles on flights. All of which more than justifies the fee — if you really intend to do enough jetting to pay for it.
“To create a card with such value, you need the ability and flexibility to actually take advantage of its benefits.” There may be other restrictions, and if you’re earning perks and not using them, paying an annual fee is like throwing money away.”
Fees buy extras that seem worth the cost
Some cards with annual fees, especially those with very high annual fees, offer unique perks that address exclusivity that is harder to quantify than measurable metrics like miles or cashback. The value of these types of perks, such as access to VIP airport lounges, is much more subjective.
“If the card has a specific reward that’s important to you and you can’t get it elsewhere or in any other way for the same cost or convenience, it might be worth it.
For example, the American Express Platinum Card is the official partner card for the Miami Heat, LA Lakers, Chicago Bulls and Brooklyn Nets. Cardholders enjoy top-notch perks such as priority ticket access and exclusive member admission at Home His Arena.
Only you can decide if attending a big city NBA game in style is worth the card’s $695 annual fee.
I like certain brands
If you’re loyal to a particular store, chain, team, airline, brand, venue, or other entity with its own card, the annual fee may be worth it.
“For example, if you acquire a branded card at a loyal retailer or warehouse or spend a significant amount of money each year, the value of rewards such as discounts, promotions and cashback can easily exceed the annual fee. Yes,” says Laura Adams, MBA and personal finance expert at Finder.com.
Not just retailers. Chains in almost every industry offer branded cards to their followers. For example, the Hilton Honors American Express Aspire Card is $450 a year and its great perks are easy to justify. whether or not
“If you get a card with a lot of fees that you rarely use or don’t use, it’s not worth owning,” says Adams.
you are building or rebuilding your credit
Until recently, virtually all cards were aimed at people with low or no credit and charged an annual fee. Issuers such as Petal are working to change that, but you may still need to buy to regain credit bureau preference.
Credit Summit CEO Carter Seuthe said: “People who don’t have a bank account or who have a fair amount of credit may not be able to get such a card, so a card with an annual fee is definitely your best bet.”
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