What type of fee is typically charged by credit card companies on an annual basis?

The annual fee is a charge that credit card companies impose on cardholders every year for the privilege of using the credit card. This fee can vary widely among different credit cards depending on the card's features, benefits, and rewards programs. Generally, premium credit cards that offer extensive rewards or perks may have higher annual fees, while basic cards may have lower or no annual fees.

Understanding this fee is important for consumers as it can impact the overall cost of using a credit card. It is also one of the factors consumers consider when choosing a credit card, alongside interest rates and rewards.

In contrast, service fees are charges associated with specific services provided by the credit card company, penalty fees are incurred due to late payments or exceeding credit limits, and transaction fees might apply when making purchases in foreign currencies or using an ATM. These fees serve different purposes and are not charged on an annual basis like the annual fee.