Credit cards often come with annual or renewal fees, which many users try to avoid. However, not all paid credit cards are bad. In fact, some cards with annual fees can offer significantly higher value than no-fee cards—if used correctly.
An annual fee is a charge levied by the card issuer every year for maintaining your credit card account. It is usually billed in the first statement cycle after card issuance and then every year on renewal.
Annual fees can range from a few hundred rupees to premium fees running into five figures.
Lifetime Free Credit Cards
These cards do not charge any joining or renewal fee. They are suitable for beginners and light spenders but usually offer limited rewards and benefits.
Low Annual Fee Cards
Cards with low fees often provide decent cashback or rewards and may offer fee waivers on meeting minimum annual spend criteria.
Premium Credit Cards
Premium cards charge higher annual fees but compensate with luxury benefits like airport lounges, hotel memberships, golf access, concierge services, and higher reward rates.
Paying an annual fee makes sense only if the value of benefits received is higher than the fee charged.
For example, if a card charges an annual fee of Rs. 5,000 but gives rewards, cashback, and benefits worth Rs. 15,000 in a year, the card is clearly profitable.
Many credit cards offer an annual fee waiver if you spend a certain amount in a year. This spend threshold varies across cards.
If you naturally cross the waiver limit through regular expenses, you can enjoy all benefits without actually paying the annual fee.
If your spending is low or irregular
If you do not use travel, dining, or lifestyle benefits
If you consistently miss fee waiver milestones
If a similar lifetime free card meets your needs
In such cases, paying an annual fee may not be justified.
Calculate your annual spending
Estimate rewards and cashback earned
Add the value of non-monetary benefits
Compare the total value against the annual fee
If the net value is positive, the card is worth keeping.
A credit card annual fee is not a cost—it is an investment. When chosen wisely and used smartly, a paid credit card can deliver much higher savings and better lifestyle privileges than free cards.