if you're wondering if your annual fee is actually worth it on your credit card then check out this
video because basically there's just three things that you need to pay attention to when it comes to
if the annual fee is worth it or not we're talking about the bonus offer doing the math yourself and
checking the fine print and we're going to be going all over those things in this video i
want to start by mentioning that the annual fee is typically free for the first year on most credit
cards so at least for that first year generally you're not going to have to worry about the annual
fee and once that annual fee does kick in on the second year a lot of the time you can just call up
your credit card company and ask them to waive the fee and sometimes they will sometimes they won't
but it's at least worth trying and i also want to mention here that if you are paying an annual fee
and you ever want to just drop it then typically a lot of the credit cards out there they're going
to have an annual fee version and a non-annual fee version so a lot of the time you can just
downgrade from the annual fee to the downgraded version and then you don't have to actually get a
new credit card you can keep the same credit card number they'll probably send you a new card just
because it's the non-upgraded version but then you can get out of the annual fee not pay it and not
have to get a new credit card in return now one of the first things you can do to make sure the
annual fee is going to be worth it or not has to do with the sign up bonus so this obviously only
goes to those of you that are looking for a new credit card because if you are shopping for a new
credit card typically the ones with the annual fee are gonna have the higher sign up bonus meaning
something like if you spend three thousand dollars over the first three months then you'll get maybe
a three hundred dollar statement credit or a bunch of bonus points so typically the annual
fee means a higher bonus and that is something to pay attention to when your credit card shopping
now even though the sign up bonus might seem like a good thing in the short term because if you sign
up for a certain card you might get more cash back right in the beginning but the problem here
is that you have to look in the long term because we want to keep our credit cards for a long time
generally because it is going to help your credit score by building up credit history so with credit
cards you do want to keep them for a long time you want to make sure that you're looking at something
that's going to last and be into the long future and not just something that you're getting now
because it has the biggest sign up bonus so just pay attention to all of the different perks and
reward categories on the card that you're looking for and don't just pay attention to the sign up
bonus only because remember you do want to keep that card for a long time and obviously if it has
good perks and rewards then you're probably not going to want to cancel it for a long time and
please do not go out and get a brand new credit card with a good sign up bonus if you don't
actually have the money that's required to get the sign up bonus so for instance if you have to spend
five thousand dollars over the first three months then you better have that in your budget and that
better be something that's normal and doable because you don't want to go into debt just to
get the stupid sign up bonus now another way that you can tell if your annual fee is worth it or not
is by doing the math yourself because a lot of us out there were paying an annual fee every single
year but your spending might not actually justify the value that you're getting by paying that
annual fee so you want to run the math yourself and find out if the annual fee is actually worth
it or not so let's pretend that you have a credit card with a hundred dollar annual fee and because
of that you end up getting five percent cash back on all your gasoline purchases and then there's
the other credit card the downgraded version without an annual fee and that one let's say gives
you two percent back on gasoline well when you run the numbers you actually have to spend about three
thousand dollars with the card with the hundred dollar annual fee in order to basically break even
so unless you're spending more than three thousand dollars every single year in gas
then you're not actually going to be making up for that hundred dollars that you're spending
on the annual fee so you definitely want to do the math yourself and find out if you're spending
enough in those categories to justify how much you're paying in the annual fee now obviously most
of us don't know how much we're going to end up spending every single month in a certain category
so the best thing you can do is just to go back in time and check those averages because if nothing
much is really changing like for instance if your commute stays the same and you're adding up all
those gasoline prices then usually you can get an average of about how much you're going to be
spending so that you can run the math yourself so for instance if one of the categories happened to
be grocery and generally you spend 500 a month in groceries then if you just multiply that by the 12
months in the year then you're generally going to be spending about 6 000 a year in groceries
so when you run the math just use those averages and you should be able to come up with a pretty
good ballpark of how much you're spending versus how much you can get back in cash back and at
this point in the video if you are getting some value out of it can you please just give it a big
thumbs up because that'll help me tremendously and hopefully the video will be shared to more people
because of the interactions you guys are having with it thank you very much now the other thing
that we need to pay attention to when it comes to your annual fee is the fine print on your credit
card because a lot of us out there you might think that you're getting five percent back in a
certain category but you might find out that it's a revolving category meaning it only lasts a few
months out of the year or maybe it's a capped amount so for instance maybe you do get five
percent back on gasoline but it caps out at three thousand dollars a year so if you're spending more
than three thousand dollars a year in gas and it goes down to one percent after the 3000 then it
might not be worth it because of the capped amount so you definitely want to pay attention to the
fine print and look at what's really happening with your spending because i've seen a lot of
credit cards out there that even have a 500 annual fee and they come with a ton of different perks so
on the surface it looks like that credit card is going to give you a ton of value for the money
that you're spending every year but in reality when you read the fine print you'll see that
most of the perks are really hard to achieve for most of us out there and honestly when it comes to
the value of spending that much money annually it's not going to be worth it for most of us
and another example here is that a lot of the hotel credit cards out there with an annual fee
they'll actually give you a free night stay every single year so even though you're paying a hundred
dollars in an annual fee because you're getting a free hotel stay it kind of feels like you break
even but when you read the fine print you'll find a lot of the time you have to use that room within
six months otherwise it expires or maybe you can't even get the room like for instance you'll try to
book it and you'll find that a lot of the dates are booked or they don't give you enough points
to even get just a basic hotel that you're trying to get so just make sure to always read the fine
print on whatever credit card you're looking at because at the end of the day you always want
to find out what the nitty gritty details are as to whether that annual fee is going to be worth
having or maybe not and if you are interested in getting a new credit card i do have an affiliate
link to creditcards.com in the description below so go ahead and check them out if you have an
interest because they have a lot of credit cards that you can choose from and you can check out all
of the different perks for signing up and whether or not they have annual fees or not all that
kind of stuff so check them out if you have an interest but thanks for watching have a great day