Annual Fee
Also known as: yearly fee, membership fee
A yearly charge some credit cards and lines of credit impose simply for having the account open. Personal loans almost never have annual fees - they typically have a one-time origination fee instead. For credit cards, weigh the annual fee against the card's rewards and benefits.
Full definition
An annual fee is a yearly charge billed by a credit card issuer or line of credit lender for maintaining the account. It appears on your statement once per year, typically on the account anniversary or January. Why annual fees exist: Premium rewards cards (travel cards, cash-back cards) offer benefits worth more than the annual fee if you use them. A card with a $95 annual fee but $350 in annual travel credits is net-positive for frequent travelers. Annual fees and personal loans: Installment personal loans from reputable online lenders almost never charge annual fees. The one-time cost structure for personal loans is the origination fee (1%-8% charged at funding). Be cautious of any personal loan lender that mentions recurring annual fees - this is not standard and is a red flag. Calculating the real APR of an annual fee card: If you carry a $1,000 balance on a card with a 20% APR and a $100 annual fee, your effective APR is closer to 30% (the $100 fee is equivalent to 10% of the balance annually). For small balances, annual fees dramatically increase the true cost of the debt. Waiving the annual fee: Many card issuers will waive the annual fee in the first year as an incentive, or will waive it if you call and ask (citing a competing no-fee offer). This works more reliably at banks where you have multiple products.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- June 15, 2026
- APR (Annual Percentage Rate)APR is the yearly cost of borrowing, expressed as a percentage of the loan amount. It includes interest plus most lender fees, so it's a more complete measure of cost than the interest rate alone.
- Interest rateThe interest rate is the percentage of the loan balance charged per year as interest, excluding fees. It is a component of, but smaller than, the APR.
- Fixed interest rateA fixed rate stays the same for the entire life of the loan, so the monthly payment never changes. Most U.S. personal loans are fixed-rate.
- Variable interest rateA variable rate can change over the life of the loan, usually tied to an index like the prime rate. Monthly payment can rise or fall.
- Prime rateThe prime rate is the benchmark interest rate U.S. banks publish for their most creditworthy commercial customers. Many consumer rates are quoted as prime + a margin.
- Loan termThe loan term is how long you have to repay the loan, usually expressed in months. Common personal-loan terms are 24, 36, 48, 60, and 72 months.
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