You have probably heard about credit card annual fees and, if you are like most people, you probably try to avoid them. In this post, we will look at how to make a decision on paying your annual fee or canceling a card with an annual fee. Ultimately, the decision to keep or cancel any credit card is your decision. Hopefully, this post will help you decide when it is best to cancel or keep your credit card open.

What is a Credit Card Annual Fee?


First thing’s first. What is an annual fee? An annual fee, as the name implies, is a fee that the credit card companies charge you to hold their card. Many of the top ranked credit cards carry annual fees. The good news is that most of these annual fees are waived the first year, which gives you time to see if the card is right for you.

You may be asking “why would I want to pay an annual fee?” Well, while it may sound crazy, credit cards with annual fees can have some pretty great benefits. Some of the benefits of these annual fees are listed below.


Your Routine Annual Fee Audit


Credit cards will fall into two buckets: those with annual fees and those without. For credit cards that do not have annual fees, those are no brainers to keep open. If you are a responsible credit card user, these cards are only helping your credit score.

Once past the credit cards with no annual fees, it’s time to evaluate the credit cards with annual fees. For most people, evaluating things like auto, home and health insurance premiums, investments, and other financial instruments are routine. Evaluating your credit cards should be a similar project. Credit cards should be viewed as assets if used properly. They are ways for you to earn valuable points towards travel, cash back, goods and they can have some great benefits associated with them.


Chase credit card annual fee

Chase Freedom and Freedom Unlimited do not have annual fees. Chase Sapphire Reserve does.


Every year when I am looking at my credit card inventory, I evaluate all of my cards. I look at things like:

  • How much is the annual fee?
  • What are the benefits that the annual fee brings me?
  • How often do I use this card?

Tip: For those cards that you plan on keeping, but are not part of your daily spending habits, keep at least some activity on them. Banks have the discretion to cancel any of your credit cards if they see no activity on them. I always try to make a small purchase on all of my cards at least once per year. 


An Example of Keeping vs Canceling Credit Cards with Annual Fees


Here is a real world example of a credit card annual fee audit that I made recently:

American Express Delta Gold Card:

This card has a $95 annual fee. The main benefits include free checked bags and priority boarding. At first, I thought I would use these benefits, but after the first year, it was evident that I wasn’t using these benefits. The next year, when the annual fee was due, I made the decision that this card was not worth the $95 annual fee, so I canceled this card.


Chase Hyatt Card:

This card has a $75 annual fee. The main benefit of this card is a free category 1-4 night each year. I have held this card for 3 years and have used the free nights to stay in Hong Kong, Chicago, and Savannah. All of these hotels were, on average, around $250/night. Off of this card I make about $175 per year, not including any spending earning. This is a great card for me to keep open because I maximize the benefits that it provides.

Credit card annual fee free night in Hong Kong

We visited Hong Kong and stayed for free with our credit card benefits!



Many people often get scared by credit cards with annual fees. Do not be! Annual fees often mean that the cards offer benefits that outweigh what they charge (or at least that is the hope by the credit card issuer). Read the benefits of each card and compare these benefits to the amount of the annual fee and their value to you. If the credit card annual fee does not outweigh the benefits, get rid of it and look for a new card. If the credit card annual fee covers the benefits, it’s a no brainer to keep it.

One other tip is that sometimes you can do what is called a “product change”. A product change is essentially a nice way of saying downgrade. You are changing your annual fee card to one that does not have an annual fee. This is not always available, but worth asking the issuer. This is a great way to keep your credit history on this card, while eliminating the fee associated with it. I hope this post helps clear up some uncertainty when you are auditing your credit card inventory!

If you’re considering getting a new card and are responsible with your credit, we’d really appreciate it if you’d support the site by applying through our partners!

When is it worth you paying a credit card annual fee? You probably try to avoid cards that have annual fees, but should you?