What is an annual fee?

An annual fee refers specifically to a charge that is assessed for the privilege of using a transaction card, such as a credit or debit card. Financial institutions may levy this fee to cover the costs associated with maintaining the account and providing services related to the card. This fee is typically billed once a year and can vary based on the type of card, the benefits offered, and the financial institution’s policies.

In the context of transaction cards, such fees are common, especially for credit cards that may offer rewards, cash back, or exclusive perks. Understanding this concept is crucial when evaluating the overall cost of card services and is integral to making informed financial decisions regarding the use of such cards.

While other fees, like those for bank account maintenance or accessing credit reports, exist, they do not fall under the definition of an annual fee specifically tied to transaction cards.