INDIANAPOLIS — Annual fees on certain credit cards are climbing higher, with some approaching the $1,000 mark.
According to NerdWallet, premium cards — such as the American Express Platinum and Chase Sapphire Reserve are two of the biggest increases. American Express recently announced it will raise its Platinum Card annual fee from $695 to $895.
Sara Rathner, a credit card expert with NerdWallat, says credit increases happen because rewards programs are expensive and a major way these companies generate revenue.
“Credit card issuers are constantly refreshing their products to keep new and existing cardholders, and so they are making changes to different perks all the time,” Rathner said.
So, when does it make sense to pay an annual fee?
Most premium cards are geared toward frequent travelers, and it’s important to determine whether you’ll actually use the benefits.
“When a credit card costs as much as the high three figures, you definitely want to sit down and do the math,” said Rathner. “How much value are you going to get out of the card versus how much are you actually going to spend to carry the card?”
Some issuers are now offering “coupon book” style credits — statement credits that can offset part of the annual fee. But, financial experts warn that these cards are not a good option if you carry credit card debt.
“Now is the time to focus on getting out of debt as quickly as you’re able to and find ways to lower the interest you’re paying on that debt,” said Rathner.
