If you are planning to strengthen your credit, one way of doing it is the consistent use of one or more credit cards. In addition to that, credit cards companies may offer a different type of cards that comes with a different benefit. The problem is that many rewards based cards that come with hefty annual fees You might be thinking if it is worth it to apply for them. Keep reading if that’s something you’ve been wondering.
What’s This Annual Fee About?
The annual fee is an annual service charge charged by the credit card providers for using their credit card services. The majority of credit card providers in Canada, Charges credit card annual fees in exchange for various benefits. Each credit card company may have different costs, approval requirements, and payment plan conditions.
Yearly fee in exchange for various benefits like:
Low-cost roadside assistance
Airport lounge access
Discounts on goods & services
Rental car coverage
credit card payment alternatives
Why Do Credit Card Companies Charge Annual Fees?
Just like any product credit card, they are all about the revenue they can generate for the companies that produce them. They are usually marketed into different groups of consumers. Airline rewards cards are for people who love to travel, in-store credit cards for those that frequently shop. Whoever the consumer is, a top tier company can supply them a credit card to match.
Big banks or credit unions are the lenders that can offer you the widest selection of credit cards, as long as they’re partnered with at least one of Canada’s major suppliers, such as Visa, MasterCard, or American Express.
Is it a Good Idea to Pay the Annual Credit Card Fee?
f you are wondering if it is a great idea to pay the annual fees, the answer still depends on your finances, creditworthiness, and spending habits.
Paying annual credit card fee is worth it if you have:
A healthy credit report,
A decent credit score
Can access favorable payment terms, interest rates, and credit limits
Use the card almost every day
Take advantage of the perks within a reasonable time frame
handle your monthly payments responsibly
Plans of using reward points toward outstanding balances
What are the reasons why Pay the Annual Credit Card Fee is a Bad Idea?
While it is a good idea to pay for an annual fee, there are some drawbacks especially if you are unable to use them to their full capacity. Many of these credit card annual fees may cost $100 per year and up.
A credit card annual fee may not be a great idea when you:
Have a low income,
a lot of existing debt
Do not have a stable job(Work part-time, freelance, by contract, or are unemployed)
Cannot afford to make more than minimum balance payments
Do not use your points and other benefits consistently
Have compulsive spending habits
Will You Earn Rewards Rather than Saving Your Money?
When all is said and done, if you are still having trouble deciding whether or not to apply for a credit card with an annual fee. If you don’t have stable finance, it is safer to look for a no-fee card, many of which still come with a few benefits that you can take in. If you have a solid income, good credit, and find a premium card that you can use all the time, fantastic because the rewards can certainly be worth the annual fee.
Having a credit card is not easy, whether it is a good idea to pay an annual fee or a bad idea the answer is still in your hands. Always remember a credit card is the best tool to build your credit rating. In case you failed to manage your finances properly with your credit card Mortgage in Canada like Private Mortgage Canada may help you find a way to do debt consolidation.
Contact us today so we can guide you.