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Research: Think First Before Picking a Card With an Annual Fee -

After hours of searching you’ve finally found it – the perfect credit card. It has all of the features you want, an attractive rewards program, a reasonable APR, the ability to customize it with a cute little photo of your pet. You are all set to fill out the application and submit it for instant approval when you notice something that you don’t like. The card comes with an annual fee.

While it likely isn’t a tremendous amount of money, the notion of having to pay a fee once a year for the privilege of carrying that particular card may irk you. The fact is, annual fees have on cards have become more prevalent sine the 2009 passing of the CARD Act, which restricted the types of fees card issuers are able to levy on cardholders. As a result, more and more of them are either implementing or raising annual fees simply because they can. According to the direct mail tracking service Synovate Mail Monitor, some 35% of credit card offers that were sent out in the final quarter of 2009 had an annual fee attached to the card, the highest percentage throughout the previous 10 years.

Before heaving an exasperated sign and submitting the application anyway, ask yourself a few things first:

Will you positively beyond a doubt utilize the rewards attached to the card?

If you are likely rack up rewards but never use them, paying an annual fee is nothing short of a waste of money. The fact of the matter is, the vast majority of consumers never cash in on their rewards programs and the points, miles and perks go unused. Consider if the rewards fit into your lifestyle and if you decide that they do, calculate how much you would have to pay for the perks outright vs. the cost of the annual fee on the card.

Are the benefits worth it?

Does the credit card you have your heart set on truly have spectacular rewards or offer you better payment options? If so, the annual fee might be an expense worth paying. Look for things like lower interest rates, flexible payment options, concierge services, extended warranty coverage options, the opportunity to work around preset spending limits and loss protections services for things like lost luggage and cancelled trips. Depending on how much you utilize the card’s perks, the annual fee may essentially pay for itself several times over in the form or warranty extensions and other services.

Are those rewards easy to redeem?

The harder you have to claim your rewards, the less worthwhile they are. Investigate the card issuer’s website and look for a link to their rewards page. It should be easy to navigate to and present you with a clear-cut explanation of how to go about redeeming your points, miles, cashback bonuses or whatever perks the card avails you of. Should it be necessary for you to speak on the phone to a customer service representative, a live person should be easily accessible via a telephone number prominently displayed on their site. If it’s too tricky to cash in on what you’ve earned, take a pass on the card – especially in light of the annual fee.

What about other fees?

Make sure that you know whether or not there are any other hidden fees attached to that particular card. Thing to look for include an extra charge to claim rewards or a spending minimum in order to activate the cashback bonus. In both those cases you may be better off pocketing the annual fee and picking another card.

Keep in mind that you always have the option of calling up the card issuer and requesting them to waive the fee. It never hurts to ask.