James DiLellio Weighs in on No-Annual-Fee Credit Cards: Smart Choice or Overhyped Perk?

No-annual-fee credit cards offer a compelling way for consumers to build credit and earn rewards without added costs, but are they always the best choice? Pepperdine Graziadio faculty member, James DiLellio, offers expert insights into the benefits and limitations of these cards in WalletHub’s latest analysis.

According to DiLellio, while consumers should always be mindful of fees, an annual fee isn’t necessarily a deal-breaker. "The annual fee could be beneficial if incentives to use the credit card offset this fee," he explains. For those who maximize rewards and perks, a card with a fee might still provide more value than a no-annual-fee alternative.

However, younger credit card users or those with lower spending levels may benefit most from avoiding annual fees. “Their spending levels typically won’t generate enough of an incentive to offset the annual fee,” says DiLellio, emphasizing that choosing the right card depends on individual financial habits.

One costly mistake many cardholders make is holding onto cards with annual fees they no longer use. “Like any other recurring expense, I’m sure there are plenty of credit card holders who retain older cards that have an annual fee but are used minimally,” he notes.

As for whether everyone should carry at least one no-annual-fee credit card, DiLellio believes it depends on personal spending patterns and the ability to manage fees responsibly. While these cards can offer flexibility and long-term value, he warns against a one-size-fits-all approach.

Read the full article here.