There is no denying that reward credit cards can have serious perks for consumers. No matter if they are cash back cards or travel reward cards, it's always nice to earn a reward on the spending that you would need to do anyways. The only downside is that a majority of the cards that offer the nicest rewards also have an annual fee. Luckily, there a few tips to help you potentially avoid ever paying your credit card's annual fee.
Before you do anything, it's important to have a calendar reminder set for yourself a couple months before the annual fee is set to be charged on your account. This will give you plenty of time to work with the issuer. Here are five ways to get out of paying your credit card's annual fee.
Ask to Have Your Credit Card's Annual Fee Waived
It costs issuers a lot of money to gain each new cardholder. Because of that, they are usually willing to go far in order to keep them and keep them spending money on their cards. The next time your card is due for an annual fee to post, simply call them and let them know that you are thinking about consolidating your spending onto just one credit card. Ask them if they would be willing to waive your annual fee. Sometimes they will be happy to do so if you spend a set amount of money on the card over the following couple of months.
Talk to a Retention Specialist
If asking the customer service representative to have the annual fee waived doesn't work, then it's time to get a little more serious. Let them know that you are considering canceling the card altogether because it might not be worth the fee you pay. They will then end up transferring you to a retention specialist. This person has quite a bit more power to offer points, miles or a statement credit in exchange for the annual fee.
A retention bonus can vary greatly between issuers and even between retention specialists that you might speak with. If you do not receive the answer that you had hoped for, you can always hang up and call back the next day. This is why it's important to start the process at least a month before your annual fee is due.
Downgrade to a No Annual Fee Card
If you have talked to a retention specialist and they are not willing to budge on the annual fee, then it might be time to downgrade your card to a no annual fee version, if possible. This likely will mean your rewards going forward will be less, but you will not face the annual fee for the rest of the time you have this card. An example of cards that you can do this with would be the American Express EveryDay Preferred card downgraded to the no annual fee American Express EveryDay card.
Apply for a Card that Waives the Annual Fee on Year One
Because there is so much competition for business, a lot of credit card issuers will waive the annual fee for the first year. This will allow you to sign up for a card that you might not have done so before and try it out. You can see if the rewards work for you and if they do, then you can attempt to get the fee waived and keep it for longer than just the one year.
Cancel Your Card as a Last Resort
The last thing you want to do is cancel your credit card. This will affect your credit utilization ratio, which makes up 30 percent of your credit score. If you have decided that the card is not worth the annual fee and the issuer will not waive it, then this might be your only option. It's important to keep in mind that most issuers will allow you to cancel a card up to 60 days after the fee is posted to your account and not be responsible for paying that fee.