Some rewards credit cards come with annual fees.
You should consider whether the rewards you may earn are likely to be worth more than the fees charged. If it looks like you’ll pay out more than you’ll get back, then a rewards credit card might not be the right choice for you.
For example, let’s imagine your rewards credit card costs £100 a year and offers 2% cashback on every purchase. You would have to spend at least £5,000 a year on your credit card to earn back the cost of the annual fee in cashback. If you’re unlikely to spend that much on your card, then the fee may outweigh the reward. Another deal may be better suited to your spending habits.
Rewards credit cards may also come with additional fees for actions such as transfers and cash withdrawals. Paying late, missing a payment or exceeding your credit limit may also mean you incur a fee.
» MORE: Credit card fees explained