Why do some of the best credit cards have annual fees?

Many of the market’s best overall credit cards charge annual fees. And while that’s counterintuitive in the sense that no one would opt for a card with a fee over a no fee card if all else were equal, you have to remember that other factors are in play. In most cases, rewards are the explanation.

It doesn’t really make sense to pay a fee to use a 0% credit card, after all, since your goal in that situation is to reduce the cost of your debt. But paying a fee for one of the best rewards cards can help you get the most total value. It just depends on your spending habits and available options. You generally won’t qualify for rewards worth paying for until you have at least good credit.

So the moral of the story is that you can’t assume a no fee credit card is automatically better than a card with a fee. You have to compare the total package offered by each to see which is right for your particular needs.