What are Annual Fees?

Annual fees are membership fees that are charged to card users for the ability to carry a credit card. Annual fees often described as convenience fees. Credit card companies use annual fees as a way to make money given that there is no opportunity for interest charges if a credit card balance is paid off in full at the end of each month.

When Were Annual Fees First Introduced?

It is believed that the first annual fees for credit cards came when American Express appeared on the scene in 1958. By the time the 1980's rolled around, most card companies were charging this "convenience fee" including those who were earning from interest charges. The companies claimed that this kept interest rates low. However, annual fees become increasingly out of favor among credit card companies in the 1990s as a result the popularity of AT&T's no-annual-fee credit card.

Annual Fees Today

Today, some companies still charge annual fees.  Usually these fees are imposed on either individuals with less than perfect credit or people who use so-called "prestige cards." However, the majority of the industry has since disposed of annual fees altogether.

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