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Is it Worth Paying a Credit Card Annual Fee?

I was surprised to see that I was charged an annual fee on my credit card statement today. I’ve never had to pay an annual fee before, because I’ve always been able to get it waived. But this got me thinking about whether or not it’s actually worth paying the annual fee.

There are a few things to consider when determining whether or not an annual fee is worth it. First of all, what benefits does the card offer? If the card has rewards or perks that are valuable to you, then the annual fee may be worth it.

Secondly, how much would you save by avoiding the annual fee? If the fee is relatively small compared to the overall credit limit, it may not be worth the hassle of trying to get it waived.

Lastly, what is your financial situation? If you are already carrying a balance on the card, paying an annual fee may not be feasible.

Ultimately, whether or not an annual fee is worth it depends on your individual circumstances. It’s important to weigh the pros and cons before making a decision.

What Is an Annual Fee?

An annual fee is a charge that is assessed each year by the credit card issuer. This fee is in addition to any other fees that may be charged, such as late fees or foreign transaction fees. In the Philippines, annual fees can range from Php 500 to Php 5,000.

Annual fees are often waived for the first year, and sometimes even for the second year. After that, the issuer may start charging the annual fee. Some issuers will offer to waive the fee if you meet certain criteria, such as spending a certain amount of money each month.

Annual fees are sometimes charged by cards that offer rewards or other benefits. For example, a travel rewards credit card may have an annual fee in order to cover the cost of the rewards program.

Cards with annual fees often have higher interest rates than cards without annual fees. This is because the issuers are trying to offset the cost of the annual fee. Cards with annual fees also tend to have more valuable perks than cards without annual fees.

Credit cards with no annual fee in the Philippines

There are a few credit cards in the Philippines that do not have an annual fee. These include the BDO Cash Card, the Citibank Savings Mastercard, and the Security Bank Mastercard.

The Citi Simplicity+ Card is one of my favorite no annual fee cards because it offers great rebates and flexible payment terms. Cardholders who pay at least the minimum due on or before their due date will get a 10% rebate on interest charges.

Additionally, the card has no annual fee, no late fees, and no overlimit fees. It also offers discounts of up to 50% on participating resorts and hotels, as well as restaurants. I highly recommend this card if you are considering a no annual fee card..

Other credit cards with no annual fee in the Philippines inlclude:

  • AUB Classic Mastercard
  • Metrobank M Free Mastercard
  • PSBank Credit Mastercard
  • PNB Ze-Lo Mastercard
  • Robinsons Bank DOS Mastercard
  • Security Bank Next Mastercard

These are just a few of the credit cards that are available in the Philippines with no annual fee. There are many other options available, so be sure to compare different cards before deciding which one is right for you.

READ: Best Credit Cards with No Annual Fee in the Philippines

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Benefits of Paying an Annual Fee

Annual fees are not always a bad thing. In fact, there are some situations where paying an annual fee may be worth it.

If you are a heavy spender, you may be able to earn more rewards by using a card with an annual fee. This is because cards with annual fees often have higher rewards rates.

For example, a card with a 1% rewards rate and a Php 2,000 annual fee will give you Php 2,000 in rewards for every Php 200,000 you spend. A card with the same annual fee and a 0.5% rewards rate will only give you Php 1,000 in rewards for the same amount of spending.

If you travel frequently, a card with an annual fee may also be worth it. This is because cards with annual fees often come with travel perks, such as airport lounge access or free checked bags.

Lastly, if you have good credit, you may be able to get a card with a higher credit limit by paying an annual fee. This can be helpful if you often need to make large purchases or want to have a buffer in case of an emergency.

Paying an annual fee can also help you build your credit history. This is because the length of your credit history is a factor that is used to calculate your credit score. So, if you have a card with an annual fee that you’ve been paying for a few years, it can help improve your credit score.

Additionally, some cards with annual fees also offer 0% APR periods. This can be helpful if you are planning on making a large purchase and want to avoid paying interest.

Drawbacks of Paying an Annual Fee

Of course, there are also some drawbacks to paying an annual fee. The most obvious drawback is that you have to pay the fee every year. This can add up, especially if you have multiple cards with annual fees.

Another potential issue is that you may be tempted to spend more money just to earn the rewards. This can lead to debt if you are not careful.

Lastly, if you decide to cancel the card, you may not be able to get the annual fee refunded.

Before You Decide

Whether or not an annual fee is worth it depends on your individual circumstances. It’s important to weigh the pros and cons before making a decision.

If you are considering getting a card with an annual fee, make sure to read the fine print. Some issuers will waive the fee if you meet certain criteria, such as spending a certain amount of money each month.

It’s also important to consider whether you will actually use the benefits that come with the card. If you are not a heavy spender, you may not be able to earn enough rewards to offset the cost of the annual fee.

Lastly, make sure you are comfortable with the interest rate. Cards with annual fees often have higher interest rates than cards without annual fees. This means you will have to pay more in interest if you carry a balance on the card.

If you are not sure whether a card with an annual fee is right for you, consider getting a card without an annual fee first. You can always upgrade to a card with an annual fee later if you find that it makes sense for your spending habits.

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How to get a credit card’s annual fee waived or reduced

If you are not sure whether you want to pay an annual fee, there are a few things you can do to try to get the fee waived.

Ask the issuer if they will waive the fee

Asking the issuer to waive the fee is the most straightforward approach. You can do this by calling customer service and asking if there are any ways to get the annual fee waived. Some issuers may be willing to waive the fee if you are a good customer or if you have been with the company for a long time.

Meet the minimum spending requirement to get the annual fee waived

Some issuers will waive the annual fee if you meet a minimum spending requirement within a specific period of time. For example, you may need to spend Php 20,000 within the next 30 days. If you are able to meet this requirement, you can get the annual fee waived for that particular year.

Downgrade to a card with no annual fee

If you have a card with an annual fee and you don’t want to pay it, you can try to downgrade to a card that doesn’t have an annual fee. You will need to call customer service and ask if this is an option. Be aware that you may lose some of the benefits of the card, such as rewards or a 0% APR period.

Cancel the card

If you decide that you don’t want to keep the card, you can simply cancel it. You will need to pay off your balance first and then close the account. Be aware that cancelling a credit card can negatively impact your credit score, so this should be a last resort.

Annual fees are not for everyone, but they can be worth it if you use the card regularly and take advantage of the benefits. Be sure to do your research before deciding whether or not to pay an annual fee.

Final Thoughts

Is it worth paying a credit card annual fee? The answer to this question largely depends on the individual. Some people may find more value in other benefits, such as cash back or airline miles, that come with their credit card and decide that the annual fee is not worth it.

Others may feel like they are getting enough value from the card to make up for the cost of the annual fee. Ultimately, it is important to do your research and understand what a credit card offers before you decide if paying an annual fee is worth it.

Attribution: Featured Image by jcomp on Freepik

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