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Annual Fees And Their Affiliation With Credit Cards

Posted by Marketing Tactics - 29/05/09 at 01:05:54 am

Annual fees are tacked on credit card accounts to get more money for the businesses that run them. It would seem unfair to charge such a fee, and indeed there has been some backlash over the matter. Do know that you have options in avoiding this fee, but there are some instances where it can be justified.

It is average to pay about $55 or less when you do accept a credit card that has an annual fee. The annual fee can easily be forgotten, since it comes to around $10 each month. But when you take a hypothetical example of spending $200 throughout the year, you see that you will be putting 20% of that amount towards the annual fee. In addition, you will have interest to pay on top of that, making it more expensive.

So we have proven annual fees can be costly. So why do we pay them? One reason is that the borrower doesn’t have a great credit history. Lenders will use the “Your credit isn’t good enough” excuse to help milk more money out of your bank account when they can. Sadly your only way out of this mess is to increase your credit rating or find a new lender.

Reward-based credit cards are fun to have around, but they are at better odds of having an annual fee. Regardless, you can still go forth with the application and get more value in rewards than what you would pay for the annual fee. It comes down to how much you plan on using the credit card. If you don’t use it much, the annual fee might just be the deal breaker.

Annual fees can be justified, but they don’t have to be tolerated. Consumers are getting the final say in the matter through their ability to choose one lender over another. If one lender advertises no annual fee, it could mean a loss of business for separate lender. As a result borrowers are at good odds in finding a lender who doesn’t charge an annual fee. Most major creditors won’t do so in average circumstances.

Sometimes all you need to do to get what you want in life is to ask for it. If you don’t want an annual fee, ask for it to be waived. Lenders are more desperate than you realize in having your business, and odds are they will agree, albeit with a smidgeon of hesitation. If they don’t agree, its’ time to go back to square one.

Closing Comments

Annual fees don’t have to be paid if you don’t think they are necessary. In a capitalism-based economy, you have the right to choose what to buy and under what terms. Credit cards and annual fees are no different.

Learn more about student credit cards and no annual fee credit cards.