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A credit card annual fee is the minimum cost of keeping the account open for a year. It helps the issuer afford any rewards or promotional financing the card may offer as well as general account services, such as billing and customer support. The average credit card annual fee is about $19, but many cards have no annual fee. A credit card’s annual fee typically is charged on the account anniversary or the month after it. It will show up on the credit card statement like a normal purchase.
An annual fee on a credit card isn’t necessarily a bad thing. Lots of credit cards with annual fees more than make up the extra cost with better rewards and supplemental perks such as travel insurance. Others, however, try to seem prestigious by charging a big fee without offering nearly enough in return. That’s why it’s important to do your research before applying.
Here’s what you should know about credit card annual fees:
- Annual fees typically range from $0 to $500.
- The annual fee gets added to your balance as a purchase, reducing your available credit (and possibly leading to interest charges) until you pay it off.
- As a special promotion, many credit cards waive their annual fee during the first year an account is open.
- If you ask your credit card company to lower or waive your annual fee, they may consider it. But don’t count on your request being approved.
- You should only get a credit card with an annual fee if it will save you more money overall than the best no annual fee card you can qualify for.
- Getting a starter credit card with no annual fee is a great idea if you are new to credit. Closing your oldest credit card account can hurt your credit score, and you probably don’t want to continue paying for a card that you eventually stop using as your credit improves.
All in all, annual fees may or may not be worth your while, depending on what your card gives you in return. But it’s best to avoid fees while building credit, if possible, since you’re unlikely to get benefits that are worth the cost until you're more established. Once you’re able to qualify for more lucrative rewards cards, you can weigh the fees against the benefits and decide which card is right for you.

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