Fee-Based vs No-Fee Credit Cards

Fee-Based vs No-Fee Credit Cards

It is natural to want to avoid additional costs, such as fees. However, it is crucial to discern when fees are necessary, and when you want to avoid them by finding alternative options . This logic also applies to credit cards. Despite the instinctual reluctance to pay fees, there can be instances where the value derived from the credit card that comes with fees surpasses the drawbacks. Read on to learn more about credit cards with fees to assist you in identifying which ones suit your needs.


First, the majority of credit cards have fees. You may need to read the small print to find them, but your credit card statement will highlight them in bold. These fees include the following:

  • Over-the-limit fees
  • Late payment fees
  • Cash advance fees
  • Balance transfer fees
  • Foreign transaction fees
  • Returned payment fees
  • Annual fees

These fees are in addition to standard interest charges based on the outstanding account balance. However, when most people discuss fee-based cards, they are talking about annual fees, which are fees charged simply for having the credit account and any associated benefits of the credit card available to you.

Some cards charge annual fees in exchange for better rewards or lower interest rates. Regardless, it is a good idea to crunch the numbers to determine if the card's benefits are worth the additional fees for how you plan to use the credit card. In other words, are you willing to pay the price every year to have that particular fee-based credit card?


Benefits and rewards credit cards are usually fee-based, though a few exceptions exist. Most rewards card companies that require annual fees state that their rewards or points systems are superior to cards that do not have annual fees. The bottom line is that you need to look at the potential benefits of having a fee-based card compared to similar cards that do not charge annual fees. Then you can better determine if you wish to pay the fees to enjoy the benefits.

Review factors including introductory offers (and the likelihood that you will make the qualifying purchases to receive those awards and offers) and other vital details about the fee-based card, such as interest rates, other fees, grace periods, introductory offers, bonuses, and the value of the rewards themselves. For instance, some companies offer one percent cash back without an annual fee. In comparison, those with annual fees may offer two percent as a standard cashback percentage while offering as much as three percent on certain purchases (gas, groceries, restaurants, etc.). This could be valuable if your typical spending aligns with the bonus miles or points.


Of course, the ultimate goal when using fee-based cards is to ensure that you do not end up paying more for the privilege of membership than you're getting back in potential rewards. While the introductory offers may by tempting, remember that the annual fees last far beyond that bonus point offer. The most important thing is to keep the long-term in mind when comparing offers to ensure you're not paying more for the card than the card is worth when choosing fee-based credit cards.


There are many potential dividends and risks associated with fee-based credit cards. Potential dividends include rewards, lower interest rates, and outstanding introductory offers. That is especially true for cards that offer special promotions for balance transfers that may allow you to pay off debt at a considerably lower interest rate. The risks, though, are that you're using a credit card whose annual fees are locked in and which may outlast the rewards received from having the card by far.


It always comes down to risks and rewards. However, you need to choose the option that most closely aligns with your spending patterns and overall goals for a particular credit card. If you're planning a trip, then a fee-based credit card gives you the bonus you need to earn the airline or hotel accommodations for that trip. Remember, the annual fees will continue long after your upcoming trip is a memory, so choose wisely. Another card may help you accomplish the same goals, although it may take longer to earn the points you need to redeem. The right card is the one that helps you meet your goals at the right time for your needs.

Information presented in the Financial Advice website is provided for educational purposes only and is not related to Ameris Bank's actual products or services. Ameris Bank makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Ameris Bank recommends you consult a professional for any specific guidance you are seeking.