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Annual fee is a money term you need to understand. Here’s what it means.
What is an annual fee?
An annual fee is a yearly charge by banks and financial institutions to customers for use of their credit cards. The card issuer adds the annual fee to the customer’s statement.
Some of the credit cards that commonly have annual fees include:
If you are trying to avoid paying an annual fee, we have a wide selection of the best credit cards with no annual fee.
Additionally, some credit cards waive the annual fee initially for new customers. If you are interested in opening a rewards card or a travel credit card that comes with an annual fee, make sure to run the numbers to guarantee that the cost of the card won’t outweigh the value of the rewards.
Individuals with poor credit often have trouble securing credit card approval. If you have been denied for conventional cards, explore cards intended for those with bad credit. These cards often have excessive costs, such as an annual fee, monthly fee and high interest rate. Shop around to get the best possible terms.
Annual fee example
Usually, you can find a credit card that doesn’t have an annual fee. However, if you have bad credit or want to open a rewards card, you may encounter cards that have annual fees.
Read the terms and conditions of the card so that you know what to expect. For example, assume that you want to open a rewards card that offers travel perks and the accumulation of air miles. It has an annual fee of $100, and there is a bonus worth $300 just for opening the card. You anticipate earning $200 to $300 in rewards each year. In this situation, it makes sense to open the card because your rewards exceed the annual fee.
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