Taking out a credit card that offers rewards and perks can make using it a breeze. However, you might have stopped yourself when realizing that there were annual fees associated with keeping the account active. Understanding why companies add costs to these accounts can help you to make a decision on whether or not to apply. For some credit card enthusiasts, they don’t necessarily mind spending more to keep the account open because of all of the value that they receive in return.
What Are The Disadvantages?
The most obvious disadvantage of taking out one of these cards is that you’re paying a yearly fee just to keep it open. The amount you spend isn’t necessarily high when compared to some of your other bills, but it is still a cost you’ll need to take into consideration before signing any paperwork. If you aren’t planning on using often, paying this amount every single year may be like throwing money out the window.
What Are The Benefits?
Issuers of fee-based accounts often look at users as more of their VIP members when compared to those who take out no-fee cards. Because of this, you’ll get lots of different perks and rewards that can truly begin to pay off the more that you use that little piece of plastic. In fact, airport lounge access is one such perk, as are points that accumulate and that can be used to save money on other purchases.
The fact that you’re able to accumulate these points and use the rewards regularly can help you to benefit from the account you’ve opened. Many users find that the yearly fee they have more than pays for itself because of the number of perks that they receive in exchange. Essentially, if you want more bang for your buck, you’re going to have to pay for it.
Depending on the specific card you take out, you can see benefits like travel protection, free FICO score checks, money back on all purchases and even extended warranties. These benefits go far beyond just the points that you’ll accumulate since you’ll have greater access to member benefits specific to that card-type. If you’re planning on using the new line of credit often, having these perks can mean saving a lot of money on different purchases in the process and experiencing things you wouldn’t without it.
Understanding What Works For You
Before signing along the dotted line of any company, it’s important to weigh the pros and cons of what works best for your needs. If you’re planning on using often, you may want to bite the bullet and agree to the annual charge. The number of perks and rewards that you receive as a result will help to offset that yearly cost.
However, if you’re not planning on using your newfound wealth more than once or twice a month, it might be best to go with an option that has no fees and no charges. Keep in mind that the majority of fee-based accounts are deducted automatically or put towards the balance due. This simply means that you won’t need to worry about paying it yourself and running the risk that you forget payment is required.