One Fee It May be Worth Paying

MSN Money lists 10 fees you shouldn't be paying including this one at #5:

Rewards card annual fees. An increasing number of rewards cards charge annual fees. However, there are cards with great perks and no fees.

Yes, it's true that IN GENERAL you do not need to pay annual fees to get a good rewards credit card.

And yes, it's true that an increasing number of rewards cards charge annual fees.

And yes, it's true that there are cards with great perks and no fees.

But that doesn't mean that there aren't cards worth paying an annual fee on.

For example, in How to Get 6% Cash Back on Grocery Purchases (Or $500 Cash Back) I highlighted one. Since I wrote that post I've gotten the card and have been using it very frequently. In fact, it's the #1 card in my current cash back strategy. IMO it's a SURE THING that this card has more than made up the $75 annual fee (and for new card holders, the $100 application bonus offsets the first year's fee anyway.)

Like with most things personal finance-related, there is a general rule and then exceptions. The general rule is that you shouldn't pay for a cash back rewards card. The exception is that there are some cards worth the money. Do the math based on how much you charge and where you charge, then decide if any specific card does or doesn't work for you accordingly.

Comments

[SteveD]

I paid $90 to get a British Airways card which came with 100,000 miles (after $3000 purchases in 3 months). That's enough for TWO flights from San Francisco to Europe (though to be fair, they have very limited selection of flights and there are a lot of extra charges to use the miles). Assuming that I can find good flights that fit my schedule, that's definitely worth the cost! However I'll be canceling my card soon now that I have the miles.

[Hamaca]

I agree completely. I too refused to pay an annual fee until you made me aware of this card. I have never seen another card that offers anywhere near 6% on groceries year round with no limit on spending. My only issue with this card is that there is a one month lag in AMEX applying the rewards to your rewards balance. Other than that, the card has worked great. I hope that AMEX does not change this rewards program.

[Matt]

I also agree about the Blue Cash Preferred card. Even taking the half-year annual fee (the anniversary date for my AMEX account, originally a Blue for Students, is February) out of the cash back I've earned in the 2.5 months I've had the card, I'm still earning 3+% cash back. It would be nice if the one-month lag didn't exist, but it's a small price to pay for such an excellent reward.

[Tim]

Love the Blue Cash Preferred except for the month lag. As to the fee I was $25 ahead on the $100 cash back and then I referred a friend and got $75 for that. So one way of looking at it is, my fee is covered until 2013, then it's $50 for that year and all the rewards are gravy. I hope the rewards stay in place for the long haul.