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When making a purchase, you want to be sure you’re getting the most bang for your buck. And for those who pay using rewards credit cards, this could mean racking up points or miles to redeem for free travel, cash back and merchandise every time they swipe their card. But great perks often come with high annual fees — in some cases, over $600 — and paying a fee might not be worth it for everyone. 

Below, CNBC Select breaks down why credit cards have annual fees, how the fee is paid and questions to consider to help you decide whether a card will be worth it for you.

Credit card companies make money on the fees they charge customers, including the annual fee, interest charges that rack up when you don’t pay your bill in full each month and interchange fees that businesses pay every time you swipe your card.

However, the annual fee also offsets the cost of offering cardholders rewards and additional perks, like yearly travel credits or car rental insurance. And in many cases, the more perks you receive, the higher the annual fee will be.  

The annual fee will automatically show up on your credit card statement once per year as a lump sum charge. You’re typically charged during the same month that you sign up for the card and then every 12 months after that. You’ll pay the annual fee the same way you’d pay for regular purchases shown on your statement. 

There are tons of credit cards out there with tempting perks. For example, right now the Chase Sapphire Preferred® Card is offering new customers 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s over $900 when you redeem through Chase Travel℠. You can also enjoy benefits such as 5X on travel purchased through Chase Travel℠, 3X on dining, select streaming services and online groceries, 2X on all other travel purchases, 1X on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.

This basket of benefits will cost you $95 per year. The annual fee can very well be worth it for some people, but not for others. Here are some questions to ask yourself to figure it out if the annual fee is worth the expense:

1. How confident are you with managing the credit cards you already have? 

First and foremost, honestly ask yourself if you are a responsible and confident credit card user. Some cards with more perks and higher annual fees may have many moving parts that include more than just paying your bill on time each month.

Depending on the card you choose, you might have to spend in certain categories to receive bonus points. With rewards cards, you’ll need to follow the issuer’s steps to maximize your point redemption, which can sometimes be complicated. Plus, you’ll need to take extra steps to make sure any insurance perks or subscription discounts are activated. Doing all this work to take full advantage of the card’s perks may feel overwhelming in and of itself. 

“If you’re just getting started with your credit journey and you aren’t confident that you can use credit responsibly, start out with a standard secured card or a student card to get into the habit of being a responsible credit user first,” said Tara Falcone, a Certified Financial Planner and the founder of the financial literacy program ReisUp. “Once you feel convinced you can handle credit responsibly, then you can look for cards with additional perks.” 

2. Do the perks actually matter to you? 

You should also consider if you even care about the perks being offered. If you don’t do much traveling, then it doesn’t make sense to pay for a credit card that mainly boasts travel perks like free checked bags, hotel elite status, airport lounge access or rideshare credits.

Considering your personal values first will help you find a credit card that more closely aligns with your lifestyle and you can avoid feeling like you’re paying an annual fee for things you may not care about or have a use for. 

3. Do the perks make you feel like you need to change your lifestyle in order to take advantage of them? 

Earning bonus points for spending a certain amount of money when you first open the card is a pretty common (and alluring) offer. The American Express® Gold Card, which has a $250 annual fee, offers 60,000 Membership Rewards® points if you spend $6,000 on eligible purchases with your new card within the first 6 months of card membership (see rates and fees). Terms apply.

Before you sign up for a card that requires you to meet a big spend requirement in order to earn the welcome bonus, consider how much you typically spend in a month on your credit card. For some people, it won’t be a big deal to spend $6,000 over six months. However, if you’re a student or someone who has much lower monthly expenses, you may find yourself searching for purchases in order to meet the spending requirement. 

“People approach rewards credit cards from the perspective of ‘how much should I spend to get this perk?’ And that’s the wrong way to approach it,” Falcone said. “The healthier way to approach this is ‘how quickly will I recoup this fee just through my standard living and spending habits?'” 

Let’s say you have a large family and spend a ton each month on groceries. A credit card that gives you a significant amount of rewards points or cash back for supermarket purchases and a yearly credit for groceries might be a better fit for the purchases you already make than a travel credit card that rewards you when you buy airline tickets, for example.  

4. Will you get more value back for paying the annual fee?  

If you’re paying a $500 annual fee but the value of the perks you’re receiving doesn’t equal or exceed $500, then the fee may not be worth it for you. Sometimes, it’s easy to tell whether the value of the perks outweighs the fee — like the $300 travel credit can help offset the $550 fee for the Chase Sapphire Reserve® card. Throw in the Priority Pass airport lounge membership and Lyft Pink membership and you’re getting more value from the card than what you paid for the annual fee.

But other times, you may have to do a little math to make sure your regular spending offsets the annual fee. 

“If it’s a cash-back percentage, look at how much you spent on groceries, then multiply that by the percentage and see how much you’ll get back on groceries,” Falcone says. As an example, let’s look at the Blue Cash Preferred® Card from American Express, which offers 6% cash back at U.S. supermarkets, up to $6,000 per year in purchases (then 1%), and has a $0 intro annual fee for the first year, then $95 (see rates and fees).

If you spent $4,000 on groceries at U.S. supermarkets last year and expect to spend a similar amount this year, you can multiply $4,000 by 0.06 to get $240 in cash back on your groceries this year.

Keep in mind that sometimes the card’s welcome bonus can be worth enough to pay the annual fee several times over. For example, the Chase Sapphire Preferred Card‘s 75,000-point bonus is worth over $900 in travel booked through Chase Travel℠ — that’s enough to pay the $95 annual fee 10 times.

5. Does the card offer perks that you would like to have but don’t usually pay for?

“Not all value is monetary or measurable,” Falcone said. “I love bougie travel, but I’m very budget conscious and wouldn’t normally pay for upgrades or lounge access. But having a card that gives me lounge access lets me rest and feel fancy. The feeling of that convenience is valuable to me even though it’s not measurable.”

Likewise, some cards may offer insurance for car rentals as an additional perk. Even if you only use a rental a few times per year, you’ll still have that peace of mind of knowing that you’re covered if anything were to happen to the car. 

And if you already have a credit card with an annual fee that turned out to be a bit more burdensome than you expected, you can always try calling the card issuer to ask for a reduced fee or have it waived for a year. It isn’t always guaranteed to work, but it’s worth a shot.

If you’re second-guessing whether your credit card’s annual fee is still worthwhile, you can try asking for a retention offer. You may receive a one-time fee waiver, a lump sum of points or an offer similar to a welcome bonus where you earn rewards after spending a certain amount.

To increase your chances of receiving a retention offer, call customer service and ask for the retention department. Then plead your case to the representative and state why you no longer get full value from your credit card. This may include using other cards more, a change in your spending habits or maybe the issuer has raised the annual fee. It could take a few calls to get a retention offer, and even then you may not receive one.

If you don’t receive a retention offer, you can ask to be downgraded to an alternative no-annual-fee credit card or a card with a lower annual fee. Financial experts don’t recommend closing credit cards since it can potentially have a negative impact to your credit score, but there can be exceptions if the cost of the card outweighs its benefits.

An annual fee may be worth it if it pretty much pays for itself through the perks and offers benefits you actually care about, whether that’s car rental insurance, airport lounge access or statement credits for gym memberships.

On the flip side, you’ll want to make sure that you’ve built up your credit card confidence before pulling the trigger on a card with an annual fee, especially a high one. If you haven’t yet gotten a handle on managing your payments and spending, it might make more sense to focus on improving those areas before applying for another card.

For rates and fees of the American Express® Gold Card, click here.

For rates and fees of the Blue Cash Preferred® Card from American Express, click here.

For rates and fees of the Discover it® Student Cash Back, click here.