What is an...

Annual Fee

An Annual Fee is a yearly charge some lenders levy for use of their products. Annual Fees are a flat amount, charged once a year, usually on the anniversary of the account opening.

Will my Credit Report show Annual Fees?

Any credit agreements that are subject to Annual Fees can appear on your Credit Report, providing the lender shares the account information with the Credit Reference Agencies.

Note that the Annual Fees themselves won’t specified on your Credit Report, but you will be able to see your credit agreements and outstanding balances and limits. If you suspect that any of your accounts are subject to Annual Fees, it’s worth contacting the lender directly to find out for certain. The Annual Fee may make a small difference to your outstanding balance when it is added, but will not be specifically reported.

You can use checkmyfile to view your Multi Agency Credit Report, with data from all four Credit Reference Agencies, free for 30 days, then for just £14.99 each month. Cancellation is hassle-free online.

What types of products have Annual Fees?

Annual Fees are common in commercial finance, but they are present among the consumer finance world too. Credit cards, and charge cards might be subject to Annual Fees, depending on the specific product. Often, the more ‘exclusive’ a credit card is, the higher the Annual Fee will be.

Usually cards that require an Annual Fee will offer their customers some kind of additional benefit to entice people to join such as cashback or rewards. Annual Percentage Rates include Annual Fees within the calculation of the overall cost of credit.

Annual Fees must be disclosed by law before credit can be taken out, but that doesn't mean they're necessarily easy to find in the marketing that promotes the offer. If you're in any doubt about whether a credit card or other form of credit charges an Annual Fee, check the Schumer Box for more information before applying.

Are Annual Fees worth it?

Whether a product with an Annual Fee is suitable for you depends on how much usage you expect to gain from it. For example, credit cards with generous cashback and rewards, which are gained through spending, often charge a high Annual Fee. A credit card with an Annual Fee would only be appropriate if you spend enough to earn cashback and rewards that exceed the cost of the Annual Fee, thereby making a gain.

If you are unsure whether a financial product is suitable for your circumstances, you may wish to consult an independent financial adviser.

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