The best credit cards are packed with benefits and perks that can help you save money and earn rewards. But you don’t have to pay an annual fee—in fact, many of the best rewards cards don’t charge any fee at all. However, by paying the minimum on a credit card, you can take advantage of those perks and features, but there are some things you should know about them:

Annual fees

Annual fees are another way to get rewards, but they’re not usually worth it. The exception is if you use the rewards and benefits enough to make up for the cost of that annual fee.

Only pay an annual fee if:

• You get a lot of value from the perks or insurance features (like trip cancellation insurance)
• You spend enough on your card every year to earn back at least as much in rewards as what you paid in fees.

However, if you want to avoid costly interest or a dip in your credit score, SoFi says, “it’s wise to make more than your credit card minimum payment each month. An even better solution (if you can afford to do so) is to pay off your total monthly credit card balance. This way, you can dodge high-interest payments and keep your credit utilization ratio at a favorable rate.”

Rewards

Rewards can be in the form of points, miles, cash back, or other incentives. The best rewards credit cards offer flexible options to use these perks. 

You can redeem your rewards for travel and entertainment expenses like flights and hotels and use them for gift cards or even merchandise at some stores. Some rewards may even be used toward your credit card balance interest payments!

Insurance

Credit card insurance is one of the most valuable benefits of carrying a credit card. The simple fact is, life is full of unexpected events that might cause you financial hardship, and if you have to pay out of pocket for an accident or emergency, it can be catastrophic. Thankfully, credit cards offer several types of coverage in case something happens:

• Purchase protection – This covers your purchases from damage or loss. If you drop your phone on the ground and crack the screen, purchase protection will help ensure that you’re not stuck paying for a new phone outright.
• Extended warranty – This extends the manufacturer’s warranty on items such as phones and laptops by up to two years after the purchase date.
• Travel insurance – If anything goes wrong while traveling abroad (for example, if your flight gets canceled), travel insurance will help assist with getting home without having to pay out-of-pocket expenses like hotels and meals abroad

Tickets and other perks

Airline tickets. You can book flights and save on baggage fees, change or cancel reservations, and earn miles that you can redeem for airfare.

Hotel rooms. You can book hotels and resorts through the card’s travel portal, earning points or cash back on expenses like food and room service at participating properties.

Parking fees at airports or lots near major attractions, as well as other parking facilities across the country.

Grocery store rewards that give you discounts on certain items when you shop at certain stores

If you pay your card off in full each month, there’s really no reason to make a minimum payment. However, if you occasionally carry a balance on the card, then it’s important to make at least the minimum payment- or else interest will build up and your debt will grow. If you can afford it, try paying more than the minimum amount due each month so that your balance gets paid off faster.