With numerous credit cards available without annual fees, you may be questioning why anyone would opt for one that charges. The truth is that a credit card with a yearly cost can be beneficial, particularly when it comes to establishing credit and enjoying value-added perks.

While many credit cards in Singapore waive the annual fee for the first year –  and some may continue to do so in subsequent years based on certain conditions or upon request – it's important to remember that not all cards offer this benefit. In particular, premium cards with lifestyle or travel benefits tend to come with an annual fee.

If that’s the case, you may be wondering why you should even consider paying an annual fee for a credit card. Let’s explore some of the benefits:

>> MORE: How many credit cards should I have in Singapore?

Your desired terms may be offered by a card with an annual fee

If you wish to access specific features, a card with an annual fee may be your best bet. The fee goes towards offsetting the risk for the credit card company in offering you this benefit. Be mindful that the annual fee and security deposit can come with a high upfront cost, so plan your finances accordingly

Let’s take a look at some of the available options:

If you are ready to upgrade your travel game: Not only do you enjoy airport lounge access with the Citi Prestige Credit Card, it also rewards you with a free night stay when you book a minimum of four consecutive nights at any hotel or resort. With complimentary limo rides and golf games on offer too, your travel experience will never be the same again!

If cash is still king for you: The Standard Chartered SimplyCash Credit Card is a great option for those looking for a cashback rewards programme without any frills. Every qualifying purchase earns you 1.5% cashback, with no cap and no minimum spend required.

A rewards credit card with an annual fee has the potential to offer more benefits

The appeal of many rewards credit cards lies in their generous perks, ranging from high cashback earnings to travel rewards that unlock deeply discounted vacations. However, these valuable benefits—such as statement credits, airport lounge access and hotel upgrades—often come with an annual fee. 

Here are some credit cards where the potential value of the rewards could justify the cost:

For travel: Although the UOB Lady’s Solitaire Card comes with an annual fee of $410.40, cardholders will be able to earn 6 miles for every dollar spent on their choice of two reward categories. Whether you are a big spender on Dining, Travel, Fashion, Entertainment, Transport, Family or Beauty and Wellness, you can truly make every purchase work for you. Additionally, the card provides complimentary travel insurance coverage of up to US$100,000, providing you with peace of mind whether you are on the road or in the air.

For rewards points: Join the yuu Rewards Club with a DBS yuu Visa Card, where you can earn 1 yuu point for every dollar spent. This can go up to 36X points at participating merchants, including Cold Storage, Food Junction and even Singapore Zoo. Take note that cardholders will need to download the yuu Rewards app in order to track their points and redeem rewards. 

There are many valid reasons not to dismiss a credit card just because it comes with an annual fee. Your lifestyle and spending habits will factor heavily into your choice of credit card, and one way you can determine if you will get the most out of it is by estimating your yearly spending.

Because each card is unique, you will need to do the math to see if your spending will earn you enough rewards (including sign-up bonuses) and value (such as travel credits) to justify the fee. Another tip is to be realistic about whether you will actually use the rewards offered by a fee-based card. It is worth keeping in mind that many credit card issuers offer an annual fee waiver as long as you hit a minimum spend.

If the benefits don’t justify the costs for you? Consider switching to a no-annual-fee card with a strong rewards programme.