Woman paying with credit card
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No annual fee credit cards can be enticing—they create the illusion that using the card won’t cost you anything.

However, all credit cards come with some kind of fee structure. The cost of an annual fee can be worth it to consumers, since what you pay annually can be offset by perks, rewards or cash back. By reading the fine print before you sign, you can generally determine if a particular credit card is worth it—whether it includes an annual fee or not.

Getting a no annual fee credit card

Amid the flyers and catalogs in your mail, you’ve likely noticed an offer to apply for a credit card with no annual fee. You may have even been “preapproved.” Even if you haven’t received an offer in the mail, you can always seek out one of these cards and apply online. Bear in mind, though, that while a no annual fee card may save you money up front, you could end up paying higher interest rates, late fees and other penalties.

What does an annual fee get you?

A credit card’s annual fee operates much like any membership fee. For example, members of a wholesale club can choose between tiers of membership that have different costs and offer different rewards. Credit card annual fees operate similarly; often, the cards with higher annual fees offer more valuable rewards. Some popular perks include:

  • Cash back: Many cards offer 1 percent or more cash back on purchases. However, for a higher annual fee, some cards offer up to 6 percent cash back. Depending on how often you use your card, with a deal like that, you could quickly make back what you spent on the annual fee.
  • Points: With each dollar you spend, you accumulate points that can be traded for rewards such as plane tickets and gift cards.
  • Travel rewards: Rather than offering cash or points, some cards give the holder access to benefits like free checked baggage, airport lounges and trip insurance.

It’s possible to get rewards with a no annual fee credit card, but they’re unlikely to be as robust.

Getting the same perks without annual fees

In the same way that many online shoppers expect free shipping, many consumers today expect to be offered a credit card without an annual fee. If you’ve found a card with rewards and rates you like, but you want to avoid the annual fee, you have some options.

  • Ask the company to waive the fee. This may sound audacious, but if you’ve got a customer service rep on the phone, it’s not impossible. Credit card companies want your business, and if you let them know that the annual fee is a deal breaker, they may waive it for you.
  • Downgrade the card you already have. If you love your credit card and its perks but don’t like paying the annual fee, you may be able to downgrade to a version with no annual fee. This may mean losing some of the benefits, but if you’re not redeeming rewards regularly, you may not even notice.

Try a card with no fee for the first year. Some credit card companies want to entice you with a great deal, so they waive the annual fee for the first year. If you’re unsure whether the fee is worth it, try one of these. You may find that you don’t mind the fee once you start racking up rewards.

Use our calculator to figure out whether a balance transfer would be good for you.