If you're wondering if your annual fee is actually worth it on your credit card in 2022, then check out this article because basically there are just three things that you need to pay attention to when it comes to if the annual fee is worth it or not.
We're talking about the bonus offer doing the math yourself and checking the fine print and we're going to be going all over those things.
IS YOUR CREDIT CARD ANNUAL FEE WORTH IT?
I want to start by mentioning that the annual fee is typically free for the first year on most credit cards.
So at least for that first year generally, you're not going to have to worry about the annual fee.
And once that annual fee does kick in on the second year a lot of the time you can just call up your credit card company and ask them to waive the fee.
sometimes they will sometimes they won't but it's at least worth trying and i also want to mention here that if you are paying an annual fee and you ever want to just drop it then typically a lot of the credit cards out there.
They're going to have an annual fee version and a non-annual fee version.
So a lot of the time you can just downgrade from the annual fee to the downgraded version and then you don't have to actually get a new credit card.
You can keep the same credit card number.
They'll probably send you a new card just because it's the non-upgraded version but then you can get out of the annual fee not pay it and not have to get a new credit card in return.
SIGN-UP BONUS
Now one of the first things you can do to make sure the annual fee is going to be worth it or not has to do with the sign up bonus.
So this obviously only goes to those of you that are looking for a new credit card because if you are shopping for a new credit card, typically the ones with the annual fee are gonna have the higher sign up bonus.
meaning something like if you spend three thousand dollars over the first three months then you'll get maybe a three hundred dollar statement credit or a bunch of bonus points.
So typically the annual fee means a higher bonus, and that is something to pay attention to when your credit card shopping now, even though the sign up bonus might seem like a good thing in the short term.
because if you sign up for a certain card, you might get more cashback right in the beginning, but the problem here is that you have to look in the long term because we want to keep our credit cards for a long time generally because it is going to help your credit score by building up credit history.
So with credit cards you do want to keep them for a long time.
You want to make sure that you're looking at something that's going to last and be into the long future and not just something that you're getting now because it has the biggest sign up bonus.
So just pay attention to all of the different perks and reward categories on the card that you're looking for and don't just pay attention to the sign up bonus.
only because remember you do want to keep that card for a long time, and obviously if it has good perks and rewards then you're probably not going to want to cancel it for a long time, and please do not go out and get a brand new credit card with a good sign up bonus.
If you don't actually have the money that's required to get the sign up bonus.
SO THE MATH YOURSELF
So for instance, if you have to spend five thousand dollars over the first three months, then you better have that in your budget and that better be something that's normal and doable because you don't want to go into debt just to get the stupid sign up bonus. Just to know if your Credit Card Annual Fee Worth It or not.
now another way that you can tell if your annual fee is worth it or not is by doing the math yourself because a lot of us out there were paying an annual fee every single year, but your spending might not actually justify the value that you're getting by paying that annual fee.
So you want to run the math yourself and find out if the annual fee is actually worth it or not.
So, let's pretend that you have a credit card with a hundred dollar annual fee, and because of that you end up getting five percent cash back on all your gasoline purchases, and then there's the other credit card the downgraded version without an annual fee, and that one let's say gives you two percent back on gasoline.
Well when you run the numbers, you actually have to spend about three thousand dollars with the card with the hundred dollar annual fee in order to basically break even.
So unless you're spending more than three thousand dollars every single year in gas, then you're not actually going to be making up for that hundred dollars that you're spending on the annual fee.
So you definitely want to do the math yourself and find out if you're spending enough in those categories to justify how much you're paying in the annual fee now, obviously, most of us don't know how much we're going to end up spending every single month in a certain category.
CHECK AVERAGES
So the best thing you can do to Credit Card Annual Fee Worth It or not is just to go back in time and check those averages because if nothing much is really changing like for instance if your commute stays the same and you're adding up all those gasoline prices then usually you can get an average of about how much you're going to be spending so that you can run the math yourself.
So for instance if one of the categories happened to be grocery, and generally you spend 500 a month in groceries, then if you just multiply that by the 12 months in the year, then you're generally going to be spending about 6 000 a year in groceries.
So when you run the math just use those averages and you should be able to come up with a pretty good ballpark of how much you're spending versus how much you can get back in cashback and at this point in the article.
FINE PRINT
Now the other thing that we need to pay attention to when it comes to your annual fee is the fine print on your credit card because a lot of us out there you might think that you're getting five percent back in a certain category, but you might find out that it's a revolving category meaning it only lasts a few months out of the year, or maybe it's a capped amount.
So for instance, maybe you do get five percent back on gasoline, but it caps out at three thousand dollars a year.
So if you're spending more than three thousand dollars a year in gas, and it goes down to one percent after the 3000, then it might not be worth it because of the capped amount.
So you definitely want to pay attention to the fine print and look at what's really happening with your spending because i've seen a lot of credit cards out there that even have a 500 annual fee and they come with a ton of different perks.
So on the surface, it looks like that credit card is going to give you a ton of value for the money that you're spending every year, but in reality when you read the fine print.
you'll see that most of the perks are really hard to achieve for most of us out there and honestly when it comes to the value of spending that much money, annually, it's not going to be worth it for most of us.
another example here is that a lot of the hotel credit cards out there with an annual fee.
They'll actually give you a free night Stay every single year.
So even though you're paying a hundred dollars in an annual fee because you're getting a free hotel stay it kind of feels like you break even but when you read the fine print you'll find a lot of the time you have to use that room within six months.
Otherwise, it expires or maybe you can't even get the room like for instance.
You'll try to book it and you'll find that a lot of the dates are booked, or they don't give you enough points to even get just a basic hotel that you're trying to get.
FINAL WORDS
So just make sure to always read the fine print on whatever credit card you're looking at because at the end of the day, you always want to find out what the nitty-gritty details are as to whether that annual fee is going to be worth having or maybe not.
now we think you got our point "Is your credit card annual fee worth it or not?