Annual Fees Add to Credit Card Costs

As you are well aware, credit cards have fees, or extra charges. Late fees are paid if a payment is late. Interest is a fee paid to use the money on the credit card. For most cards, there is even a fee just for having the card.

An annual fee is just that. It is a yearly payment just for having your Visa or your MasterCard or whatever credit card you have. Annual fees appear on secured cards, charge cards, and subprime credit cards. Again, the fee is paid once a year, and it can be as low as $25 or in excess of $300, depending on which company you have.

Annual fees are not on every type of credit card. Cards with high interest rates typically do not have one, and if they do, their annual fees are around the $25 mark. Most often, you will find an annual fee on a rewards credit card. If you make enough purchases on this type of card, you can get rewarded with occasional free items, such as airline tickets or hotel rooms. The free reward is often appealing to customers, and the annual fee will typically be the same monetary amount as what the free reward would have cost.

If your credit card has an annual fee and you don’t use the card, the fee will still be charged. Since the annual fee does not appear on every card, you can decide whether or not you want an account with this charge. If you have a card with an annual fee, the charge is constant (unlike most interest rates). It will not change unless the company decides to raise it. If the company decides this, it must notify you 45 days before the new amount becomes official. Annual fees do not change very much, and if they do, it is often because your credit score has taken a dive.

Like I stated earlier, not every credit card has an annual fee. If your card does not have one, then congratulations on having to keep track of one less number. If you do have an annual fee on your card, there is a way to get rid of it. Simply ask your creditor if he/she can waive the fee, and more often than not it will be waived. Some cards also waive the fee if you make a certain number of purchases with the card. Of course, if you ask to waive the annual fee and it gets removed, it is possible that your interest rate could go up. It never hurts to ask, and if you decide to get a credit card, the annual fee is something you should ask about before getting an account.

David Pilley

David Pilley

David Pilley is a May 2010 graduate of the University of North Carolina at Chapel Hill, with a B.A. in communication studies and a creative writing minor. He is a native of Raleigh, North Carolina.

He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.

Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.

In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
David Pilley

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