What is an annual fee for a credit card?

An annual fee on a credit card is a fee that is placed on the card each year. Though this fee used to be a normal part of having a credit card, many cards dropped the fee in the 1980s and 1990s.

There are still cards today that have an annual fee attached to them, including cards that are secured and cards that contain incentives such as airline miles. The annual fee is a separate charge from interest, so a person who is applying for a credit card should keep this extra fee in mind. For example, if a person gets a credit card with a $500 limit and a $50 annual fee, the available credit would be $450.