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Some people simply prefer credit cards with no annual fee. Perhaps they don’t feel the additional value they would receive justifies paying an annual fee, or perhaps they just don’t want to pay to use a credit card on principle. Whether you’re one of these people or you’re simply taking an interest in a new kind of credit card, getting a credit card with an annual fee is a big decision.

Here are seven signs that it might be time for you to make the leap.

1. You pay all your statement balances in full.

Most credit cards that have an annual fee justify this cost by offering you rewards for spending in the form of points, miles or cash back. But it’s only worth earning rewards if you avoid interest charges by paying each month’s statement balance in full and on time. Otherwise, you’re better off using a credit card that offers the lowest possible interest rates. Invariably, these low interest rate credit cards will have no annual fee, and will not offer rewards.

2. You are spending enough to earn enough additional rewards to offset the annual fee.

Many rewards card issuers offer a version with and without an annual fee. For example, Capital One’s Venture Rewards credit card has a $59 annual fee (waived the first year) and the VentureOne Rewards credit card, which has no annual fee (you can read a review of the two cards here). When you aren’t using your card that much, it might only make sense to use the version with no annual fee. But as you use the card more, you may be able to earn enough additional rewards to more than offset the price of the annual fee. If this is the case, then you should consider upgrading to the card with an annual fee. 

3. The credit card you want has no annual fee for the first year.

Credit card issuers understand your reluctance to pay annual fees, so they frequently offer cards with no annual fee for the first year. This can give you a chance to try out the card and see if its rewards and benefits justify paying the annual fee after one year. And if you eventually conclude that it isn’t worth it, then you can simply cancel the card before the first time that the annual fee comes due, without having to pay it.

4. You are a regular traveler.

Travel rewards credit cards are about more than just earning points or miles. In fact, most airline and hotel credit cards offer a range of perks and benefits that can be extremely valuable when traveling. For example, airline credit cards frequently offer priority boarding, discounts on in-flight purchases and waived baggage fees. At the same time, many hotel credit cards offer elite status which can qualify you for room upgrades, late checkouts and even free breakfast. So if you find yourself traveling even just a few times a year, it could be worth having a travel rewards credit card, even though you will likely have to pay an annual fee. (If you are a frequent jet setter, check out this guide of the best travel credit cards.)

5. You are a business credit card user.

If you need to use a credit card for your small business, then you should strongly consider choosing one with an annual fee for several reasons. First, there are very few business credit cards left that have no annual fee. In addition, business credit cards can offer their most valuable rewards for common business expenses such as office supplies, telecommunications services and advertising. Finally, the annual fee paid for a business credit card will likely be considered a tax deductible business expense.

6. You are earning more money.

When cash was tight, you probably couldn’t have fathomed paying a $50 or $100 annual fee. But as your career has taken off and your income has grown, paying an annual fee might not be the barrier it once was. You might wish to pay an annual fee in order to enjoy a card with better customer service, more valuable rewards or additional purchase protection and travel insurance benefits.

7. The card offers a great sign-up bonus.

Some cards offer sign-up bonuses worth hundreds of dollars, which can be enough to offset the annual fee for several years. So if you are tempted by an outstanding sign-up bonus, it might be worth applying for the card, even if it has an annual fee.

Before you sign up for any new credit card, it’s important to do your research. This includes finding out your credit score, so you have a better idea of the terms and deals you qualify for. You can see two of your credit scores for free on Credit.com, updated every 30 days.

At publishing time, Capital One’s Venture Rewards and VentureOne Rewards credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

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