LessIsMore wrote:The only complaints I've heard about annual fees come from those who can't acquire cards without annual fees. While it's not always true, many card issuers who do charge annual fees are considered predatory - appealing primarily to prospective cardholders who have less than perfect credit. My ex-wife has such a card - a VISA (her only credit card). The CL is $1,000 and the AF is $95. The last time I checked, she was also paying a monthly maintenance fee (small, but still a fee). But, given her credit history, it's not a surprise that's all she can get. Personally, I've never had a card with such fees - and I have 14 credit cards.
There certainly is that lower tier of AF cards geared towards customers with worse credit and worse financial management skills. Banks love milking fees out of these higher risk people. Think of Capital One, which has two versions of the same card among many products - one has no AF for the higher quality customers, and the other has like a $39 AF or something like that for the rest.
There are also plenty of cards that have AFs geared towards the higher quality customer base. Sometimes they offer the illusion of prestige (think Amex Platinum and its imitators [not that all cardholders are suckers - many get more value than they pay, but there are certainly those that are in it for the air of exclusivity), but frequently they serve to make sure the customer is using it enough to make it worthwhile for the issuer. Airline and hotel cobranded cards often have AFs. If they are giving out primo rewards, they're going to make sure they get something in return. It forces some amount of loyalty out of customers.
Churners and rewards-optimizers have to carefully weigh the costs of AFs against the benefits of their cards. It can net you more than non-AF card options, but one can't spread spending too thinly accross too many cards or AFs will eat up rewards. That's really the whole point of churning: get the introductory bonus and dump the card before it becomes too costly (or, in many cases, before it costs anything at all since many cards waive the first year's AF as a sweetener).