The news: Issuers’ annual fee revenues have tripled over the past decade, driven by consumers’ surging interest in premium rewards cards, per the Consumer Financial Protection Bureau’s biennial Credit Card Market report.

How we got here: The share of consumers paying an annual fee has slowly declined over the last decade (from 18% to 16% of cardholders), but the average annual fee has increased, per the CFPB.

The popularity of premium rewards cards like the American Express Platinum and Chase Sapphire Reserve is driving the shift. These products cater to superprime cardholders who want luxury rewards and are willing to pay up to get them.

This has reversed longstanding annual fee trends, which used to be dominated by cardholders with below-prime credit scores from 2015 to 2021 using secured lines of credit, per the CFPB. 

• In 2015, nearly 40% of subprime and deep subprime cardholders paid an annual fee—versus just 14.4% in 2024. 
• Over the same period, the share of superprime cardholders who pay an annual fee jumped from 14% to nearly 20%.

Why this matters: Incumbent issuers are gearing their products toward wealthy customers who drive the majority of spending, per Moody’s. 

These strategies have landed larger issuers with 95% of accounts held by superprime and prime consumers who drove most of the growth—roughly 4%—in credit card spending during 2024.

After legacy issuers tightened their underwriting to serve the affluent, fintechs and buy now, pay later (BNPL) players are more likely to close the gap for below-prime consumers who generate more risk for lenders. 

Our take: Real opportunities abound for alternative credit providers—Klarna’s and Affirm’s BNPL-enabled card products have cleared 1 million sign-ups, and both BNPL providers are leaning into longer term, interest-bearing loans. As traditional credit cards avoid working- and middle-class families, this fintech model could serve as the replacement—potentially disrupting a key acquisition pipeline for traditional credit products.