In the early ages of the credit card industry, it was common for cardholders to pay a nominal annual fee as part of owning a credit card, similar to a membership fee. The annual fee was typically low and generally applied across all types of cards. As credit card specialists came to the industry in the 1990s and 2000s, they challenged the “one size fits all model” that had become commonplace. They offered different interest rates, varying annual fees, presence of rewards, etc., based on the creditworthiness of the applicant or the bank’s desire to acquire new customers. This tailoring of credit card offers ultimately changed how credit cards came to be marketed. The increased competitiveness in credit cards also led to a rise in the number of cards having rewards and the near-disappearance of annual fees from the market, with the exception of subprime and airline reward cards. As credit card issuers seek to differentiate their products in a crowded market, a focus on delivering premium reward programs with significant annual fees has become a new trend. This insight report explores the types of consumers who are willing to pay annual fees for rewards and how they use them.

Key questions discussed in this report:

  • How common is it for credit cardholders to pay annual fees on their primary credit cards?
  • Do consumers who pay annual fees on credit cards get rewards, or are they mostly subprime consumers?
  • Are men more likely than women to pay an annual credit card fee for a reward program?
  • Do fee-based reward credit cards appeal to younger consumers?
  • How likely are consumers who pay a fee for a reward credit card to revolve a monthly balance?
  • What factor does age have in the likelihood to revolve a balance on a fee-based reward card?
  • How does that likelihood to revolve change with income?

Companies Mentioned: American Airlines, American Express, Chase, Citi, Discover, Global Entry, Mastercard, TSA, Visa


The consumer data in this report was primarily collected from the following:

  • A random-sample survey of 3,000 respondents conducted online in October-November 2017. The overall margin of error is +1.74 at the 95% confidence level. The margin of error is larger for subsets.

Data on the industry participants were derived from interviews with industry leaders. Supplementary data were provided by secondary sources such as the Consumer Financial Protection Bureau (CFPB), the Federal Reserve Bank, the U.S. Treasury, and company websites.