Credit card annual fees help offset the cost of providing lucrative rewards to cardholders, whether it’s cash back, points, travel miles, or other perks. But if you aren’t tapping into the full potential of these benefits, it might not make sense to continue paying a fee to use your card.
The good news: There are a few ways to get this fee waived. Here’s how.
How to get your credit card annual fee waived
Your credit card probably offers a variety of benefits that you may or may not use regularly, such as cash back at the grocery store, rental car insurance, or access to an airport lounge. Although some of these perks are nice to have just in case you need them, your annual fee might end up being a waste of money if you don’t take full advantage.
You might even feel compelled to charge more expenses to your card to make the annual fee seem “worth it.” For example, you might put your Netflix subscription on a rewards card that offers 3% back on streaming services. But if you carry a balance month to month, those rewards get wiped away by the interest anyway (and then some).
“That’s why it is very important to calculate the real worth of one of these cards,” says Freddie Huynh, vice president of data analytics with Freedom Debt Relief. If you decide that paying this added fee isn’t working for you, here are a few ways you can get it waived.
1. Contact your card issuer
The first step to getting your credit card annual fee waived is leveraging your history with the issuer. If you’ve owned your card for a while and have consistently made your payments on time, you may have better negotiating power than someone who recently opened their card or has a history of late payments.
Start by calling your card’s customer service line. The number can usually be found on the back of your card or on your monthly statement. Politely explain that you would like to have your annual fee waived. Explain your history as a reliable customer and emphasize that you would like to remain one. In the best case, they might simply say yes.
But it may not be that easy. Often, customer service representatives will tell you they cannot accommodate this request as it’s not within their policy to do so. If that’s the case, request to speak with a representative from the retention department. These agents often deal with customers who already have one foot out of the door, so make sure you are seriously considering closing your account without the fee waiver before speaking with them.
2. Look for promotional fee waivers
Credit card companies sometimes offer to waive the annual fee in the first year for new customers. So if you’re in the market for a new card, look for one that’s currently promoting this perk. If you have your eyes set on a particular card, you can also try contacting the issuer to see if they’re willing to temporarily waive the fee in exchange for your business. Again, if you’re met with resistance, don’t be afraid to escalate your request to a supervisor.
3. Use military benefits
Members of the military who are actively serving (and in some cases, their family members) can take advantage of their benefits under the Servicemembers Civil Relief Act (SCRA). The act was put into place to reduce the financial burdens faced by service members on active duty. In addition to capping interest rates on any debt accumulated before joining the military and during active duty at 6%, many card issuers will also waive or refund any annual fees incurred during that time.
You may need to contact your lender to discuss eligibility and/or provide documentation. SCRA coverage typically stays in effect until 30–90 days after your date of discharge from active duty. However, depending on your lender’s policies, you may be eligible for benefits for up to one year following the completion of your active duty.
What to do if you can’t get your credit card annual fee waived
If you already contacted your credit card issuer and it is unable to waive your credit card fee, you have a few more options to consider.
1. Negotiate your card’s benefits
If you have been a loyal credit card customer with a solid history of on-time payments, your card issuer may be able to provide an additional benefit in place of waiving your annual fee, which could help cancel out the cost.
Some benefits to consider requesting include a higher credit limit, additional anniversary points, a reduced APR, or expanded travel perks. While not every credit card issuer is willing to bargain, it is worth a try.
2. Shop around for a comparable card with lower fees
If you still enjoy the rewards you receive on your current card but aren’t loving the price tag, consider looking for a new card that offers similar rewards with a lower or no annual fee. There are plenty of online credit card comparison tools that let you quickly evaluate the credit card features that are most important to you, such as the rewards offered, current APR, and fees.
3. Cancel your credit card
Another option is to simply cancel the card and close the account. But beware: This could work against you in the long run. “If you do have an annual-fee card and no longer wish to pay the fee, think carefully, as always, about closing the account,” says Huynh. Closing a credit card—especially one that has a high limit—can negatively impact your credit score.
Here’s why: The amount of revolving debt you owe compared to the total amount of credit you have available (known as your credit utilization ratio) is a major component of your credit score. Using a large portion of your available credit can appear as though you’re overly reliant on borrowing money to cover your obligations. Closing one of those cards will decrease your available credit, which can cause your credit utilization ratio to increase if you carry a balance on the others.
Let’s look at an example. Say you have two credit cards:
- Credit Card A: $2,000 limit, $600 balance
- Credit Card B: $6,000 limit, $1,000 balance
By dividing the total outstanding balance ($1,600) by the total amount of credit available ($8,000), you get an overall credit utilization ratio of 0.2 or 20%.
Next, let’s say that Credit Card B carries an annual fee, so you decide to pay it off and close the account. Now you’re left with Credit Card A, which has an outstanding balance of $600 and a limit of $2,000. That means your credit utilization jumps to 30%. As a result, you’ll probably see your credit score take a hit.
Of course, this isn’t a problem if you always pay your cards down to $0 at the end of the billing cycle.
4. Ask to downgrade your card instead
Instead of closing a card, consider downgrading it to a fee-free version. For example, the Chase Sapphire Preferred card charges $95 per year, but you could downgrade to the Chase Freedom Unlimited card instead, which is free. This strategy usually means giving up some premium perks or rewards, but you can avoid the annual fee while maintaining your credit line. Plus, it doesn’t affect your credit score. “In general, most people are better off with one of the many no-fee cards available that also offer rewards,” says Huynh.
Usually, card issuers require you to downgrade to another card within the same product line. If you aren’t sure what your options are, contact the issuer and find out.
Credit cards that offer valuable rewards may also come at a high price. If you find yourself paying an annual fee for a card that you aren’t maximizing, consider asking your credit card issuer to waive it.
Even if your annual fee can’t be waived, you aren’t out of options. Consider negotiating your current credit card rewards to offset the fee, switching to a low- or no-fee card, or canceling your card completely if it is becoming overwhelmingly expensive. Keep in mind that changes to your credit card status may impact your credit score, so consider all factors rather than making a hasty decision.
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