Annual fees vary by card and range from zero to several hundred dollars per year
An annual fee is a flat charge that the card issuer bills to your account once every 12 months, usually on your card anniversary date (the month you opened the account). Not all cards charge one — many mainstream cards have no annual fee at all. Cards that do charge one typically cost between $95 and $550 per year, depending on the card's rewards structure, perks, and target customer.
The card issuer will show the annual fee in your cardholder agreement, which you receive when you open the account. You can also find it on the card's product page on the issuer's website. The fee appears as a line item on your monthly statement in the month it's charged, and it counts toward your credit utilization if you don't pay it off immediately.
Whether an annual fee makes sense depends on whether the rewards, cash back, or other benefits you earn exceed what you pay. A $95 annual fee is worth it only if you earn more than $95 in value from the card during that year.
Key Takeaways
- Annual fees are charged once per year on your card anniversary and range from $0 to $550 depending on the card type and issuer.
- The annual fee appears in your cardholder agreement and on the card's product page before you open the account.
- Premium travel and business cards typically charge higher annual fees but offer travel credits, lounge access, or bonus points that can offset the cost.
- You can often request a fee waiver or downgrade to a no-fee version of the card if you no longer use the benefits.
- The fee is charged to your account balance and must be paid like any other charge; it does not disappear if you don't use the card.
How the fee appears on your statement and when it's charged
The annual fee posts to your account on the same date each year — typically the anniversary of when you opened the card. For example, if you opened your card on March 15, the fee will appear on March 15 of the following year, and every year after that.
On your statement, the fee shows as a separate line item labeled "Annual Fee" or "Membership Fee" with the dollar amount. It is not a purchase; it is a charge from the issuer. You owe it regardless of whether you used the card that month or year. If you have an outstanding balance, the annual fee is added to what you owe. If you pay your full statement balance each month, the annual fee will be included in that month's payment.
Some issuers waive the first annual fee for new cardholders, meaning you don't pay it in year one but will pay it starting in year two. Check your welcome offer details to see whether the first year is free.
Which cards charge annual fees and which don't
Cards with no annual fee are the most common type. These include most cash-back cards, basic rewards cards, and entry-level travel cards from major issuers like Chase, American Express, Capital One, and Discover. Examples include the Chase Freedom Unlimited, the American Express Blue Cash Everyday, and the Capital One Venture One.
Cards that charge annual fees typically fall into two categories: premium travel cards and premium business cards. Travel cards like the Chase Sapphire Preferred ($95 annual fee), the American Express Platinum ($695 annual fee), and the Capital One Venture X ($395 annual fee) charge fees but offer benefits like travel credits, airport lounge access, and bonus points that can offset the cost. Business cards often charge annual fees as well, particularly those designed for high-spending businesses or those offering premium perks.
Some issuers offer multiple versions of the same card — one with an annual fee and one without. For example, American Express offers both the Blue Cash Preferred (with a $95 annual fee) and the Blue Cash Everyday (no annual fee). The fee-based version typically offers higher rewards rates or more generous benefits.
What benefits and credits might offset the annual fee
Premium cards often include benefits designed to make the annual fee worthwhile. These vary by card but commonly include travel credits (a statement credit toward airline tickets, hotels, or other travel purchases), airport lounge access, concierge services, bonus points or cash back on certain purchases, and insurance coverage like trip cancellation or baggage protection.
For example, the Chase Sapphire Preferred charges $95 per year but offers a $50 annual travel credit, meaning the net cost is $45 if you use the credit. The American Express Platinum charges $695 but includes a $200 airline fee credit, a $200 hotel credit, and other perks that can add up to more than the fee's cost if you travel regularly.
To determine whether a fee is worth paying, add up the value of the benefits you actually use during the year. If you never travel, airport lounge access has zero value to you. If you don't use the travel credit, you don't get that benefit. The card issuer's website typically lists all included benefits in the "benefits guide" or "benefits summary" document.
How to avoid or reduce an annual fee
If you have a card with an annual fee that you no longer want to pay, you have several options. The first is to call the card issuer's customer service number (on the back of your card) and ask for a fee waiver. Some issuers will waive the fee for existing cardholders, particularly if you have a good payment history or have been a customer for several years. There is no harm in asking — the worst outcome is that they say no.
The second option is to downgrade to a different card from the same issuer that has no annual fee. Many issuers offer a no-fee version of their premium cards. For example, if you have the Chase Sapphire Preferred ($95 fee), you can downgrade to the Chase Sapphire Preferred for Students (no annual fee) or another Chase card without a fee. Downgrading does not close your account; it simply converts your existing card to a different product.
The third option is to close the card entirely. If you do this, make sure you have paid off any remaining balance first. Closing a card can affect your credit score slightly because it reduces your total available credit, but if the annual fee is not worth the benefits, closing the card may make sense.
If you want to keep the card but avoid future fees, set a calendar reminder for one month before your card anniversary. Call the issuer before the fee posts and ask for a waiver. Some customers have success doing this year after year.
Annual fees versus other card costs you should know about
An annual fee is different from other charges that may appear on your card. A late payment fee is charged only if you miss a payment deadline; it is not automatic. A foreign transaction fee is charged when you use the card outside the United States; most cards charge 1% to 3% of the purchase amount. A balance transfer fee is charged if you transfer a balance from another card; it is usually 3% to 5% of the amount transferred.
An annual fee, by contrast, is charged automatically once per year regardless of how you use the card. You cannot avoid it by paying on time, using the card only domestically, or avoiding balance transfers. The only ways to avoid it are to request a waiver, downgrade the card, or close the account.
Some cards charge both an annual fee and other fees. For example, a premium travel card might charge a $95 annual fee and also charge a 2% foreign transaction fee. Read your cardholder agreement to understand all the fees associated with your specific card.
Frequently Asked Questions
Do I have to pay the annual fee if I don't use the card?
Yes. The annual fee is charged to your account automatically on your card anniversary, regardless of whether you used the card that year or even that month. The only exception is if the issuer waives the fee after you request it, or if you close the card before the fee posts.
Can I get the annual fee refunded if I close my card right after it's charged?
Most issuers will refund the annual fee if you close the card within 30 days of the fee posting. After 30 days, the fee is usually non-refundable. Check your issuer's policy or call customer service to confirm the window for your specific card.
What's the difference between an annual fee and an annual percentage rate?
An annual fee is a flat dollar charge once per year. An annual percentage rate (APR) is the interest rate charged on balances you carry month to month. They are separate charges. You can have a card with a $95 annual fee and a 15% APR, and you would pay both.
If my card has a $95 annual fee and I earn $50 in cash back, do I come out ahead?
No. You would have a net cost of $45 ($95 fee minus $50 cash back). The annual fee is not reduced by rewards you earn; you pay the full fee regardless of your rewards balance. You only come out ahead if the total value of rewards, credits, and other benefits exceeds the annual fee amount.
Will the annual fee hurt my credit score?
The fee itself does not directly hurt your score. However, if the fee increases your credit utilization (the percentage of your credit limit you're using), it could have a small negative impact. Paying the fee off immediately keeps your utilization low and avoids this issue.