Is a Credit Card Annual Fee Ever Worth It?

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Banks are finally slowing down the push for new credit card customers—certain kinds of customers, that is. The number of direct-mail offers for cards dropped 8 percent in the second quarter of 2009. Even though there’s an overall dip, there’s been a steep increase (28 percent) of offers trying to get consumers with good credit to sign up for premium credit cards—you know, the kind with hefty annual fees and supposedly awesome benefits and rewards.

The NY Times reports on the upswing in marketing these so-called “premium” cards.

I’ve read some of the terms for these credit cards, and honestly, I’m not impressed. I can understand why banks love this type of plastic; customers spend a lot of money with these cards, and the cards reap in guaranteed annual fees for issuers. Banks are pushing these cards, simply enough, because it is in their interest (excuse the pun) to do so. That’s the same reason they are adding all sorts of other fees, and that they are willing to negotiate terms to help cardholders to pay back debt. In one way or another, these practices make the banks money.

What I don’t understand is why consumers sign up for these premium cards when there are plenty of other options with good rewards programs and no annual fees. Are the perks really all that good? Is it mainly for bragging rights?

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