Are Annual Fee Credit Cards Worth Carrying?

While premier credit cards such as Chase Sapphire Reserve and Amex Platinum have been making headlines for their sky-high annual fees, the truth is these cards may not make sense for some cardholders. In other instances, a no-annual-fee credit cardmay be best.

In the previously recorded Facebook Live video segment below, Motley Fool analysts Nathan Hamilton and Michael Douglass talk more about annual fee credit cards and when they make sense.

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Michael Douglass:Manette asks, "Areannual fee credit cards worth having?" The answer is "sometimes." A lot of itdepends on what you're looking for. Whenwe're thinking about credit cards generally, it comes down to,first question, are you budgeting well,are you able to stay out of debt? That's theassumption we're making beforehand. Butafter that, it's, where do you spend your money? Do you happen to eat out a lot? Do youhappen to go to the grocery store a lot? Do youhappen to travel a lot? Cool. In that case, I'm looking,theoretically, for acredit card that's going to give me a lot of miles, a lot of money back on food purchases thatI can then apply attractively toward travel. Yourmileage will vary. Alot of it depends on how much timeyou want to spend on your credit card accounts, too. Ifyou just want one general good cashback card, that's adifferent ball game than if you're willing to think about your spending in three or four major different buckets.Nathan Hamilton: Personal belief here, and how I manage my finances, I tend to bias towardno-annual-fee cards. But I see the value in some annual fee cards,even the ones that have uber-highpremium fees. There are some cards on the market that are $450, $550, for an annual fee. But you get hundreds of dollarsworth of statement credits for travel, you get TSA Pre-Check, whichtravelers obviously value, cango through the line in no time.Douglass: Ifyou travel a lot, that does add up to a lot ofhours that you're able to save and use productively in some other way. Hamilton: Yeah. So,I would look at it,what are those additional perks you get? Then, the bigger thing is, does your spending justify it? Becausethere are many cards for $50 or $100 where,if you're earning 2% back, you have to spend $100 divided by 2%,I don't know the exact answer, but you have to spend more than that breakeven point to essentially make rewards worthwhile. Up until that point, you're essentially incurring out-of-pocket costs, and you're paying money to earn rewards in those scenarios. So,I would just look at yourpersonal budget numbers, and run them and see what they say. Douglass: Yeah,agreed.

Michael Douglass has no position in any stocks mentioned. Nathan Hamilton owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.