One of the most important features of a credit card is its annual fee. When you find two cards with similar perks and interest rates but different annual fees, it’s a no-brainer. It makes sense to go with the lowest fee possible. But what if you only find one credit card that really offers the perks or rewards you want? How do you evaluate the annual fee in that situation?

To help you figure out what a reasonable annual fee is, let’s start by taking a look at what those fees cover.

What Does Your Annual Fee Cover?

Annual fees can vary drastically. For example, on the low end you can find no annual fee credit cards like the HSBC credit card. On the high end you’ll find elite cards like the Citi Select credit card with its $700 annual fee. The reason fees can vary so widely has to do with other features of those cards.

Some annual fees include your membership in the card’s rewards programme. The higher the annual fee, the better the terms you might find related to that programme. For example, you might be able to earn more points per dollar spent (therefore being able to redeem them faster). If your card has a points cap, you might pay more with higher tier cards (like the gold or platinum version) to have higher caps.

In addition to rewards programme features, your annual fee can go up in proportion to perks the card offers. That can include things like free insurance and extended warranties. Or you might get VIP perks like airport lounge access or free bottles of wine when you dine at partner restaurants.

What Amount is Reasonable?

Generally speaking, an annual fee is reasonable on the consumer side if you’ll get perks and rewards with a value in excess of the fee you pay. For example, if you pay a $200 annual fee but the free flights offered by your card more than make up for it, the fee is clearly reasonable.

On the other hand, you shouldn’t apply for a card with a high annual fee if you won’t get your money’s worth. So if you don’t think you’ll use your rewards points or regularly take advantage of the card’s perks, the fee isn’t worthwhile and you should look for a cheaper option with fewer frills.