Credit cards offer a variety of rewards, perks and features to customers, but banks often charge annual fees to cover the costs of these benefits. While paying an annual fee can be worthwhile for some, that isn’t the case for everyone. When this happens, many consumers choose to close their credit cards. Before closing your account, consider these seven ways to get your credit card’s annual fee waived and five alternatives if your request is denied.
[Read: No-Annual-Fee Credit Cards.]
What Is an Annual Fee?
An annual fee is what many banks and card issuers charge for keeping an account open. These fees are normally due once a year, but some credit cards break the fee down into monthly installments. Annual fees are typically under $100, but premium credit cards may charge fees up to $700.
Not all credit cards charge an annual fee. However, ones that do often have larger rewards, a substantial welcome bonus offer and more valuable perks. These perks may include a free night at a hotel, airport lounge access, free checked bags or airline elite status benefits.
7 Ways to Get Your Credit Card’s Annual Fee Waived
While annual fees help to cover the cost of credit card benefits, some banks are willing to waive these charges in certain circumstances. They will not waive them in every instance, but these are typical scenarios where you may successfully get them waived.
Ask Your Bank
As the Canadian hockey player Wayne Gretzky famously said, “You miss 100% of the shots you don’t take.” Many banks will waive the annual fee if you simply ask. When your annual fee posts to your card, call the number on the back of your credit card and ask if they can do anything to help you with the cost. The customer service representative may be willing to waive some or all of the fee.
Leverage Your Relationship
You may not be successful in simply asking the bank to waive your annual fee. After all, most businesses don’t want to give up revenue too easily. Explain that you’ve been a loyal customer of the bank and have used the card for several years. In addition, mention you make all payments on time and use the card regularly to make everyday purchases.
Also, if you have multiple bank accounts, loans or credit cards with the bank, talk about how you’ve been a profitable customer. Banks are more willing to waive fees when a customer has additional accounts and generates higher revenue.
Use Military Benefits
Some credit card issuers waive annual fees for active-duty military personnel and you may find banks that provide discounts and fee waivers to service members and their families. This is an excellent opportunity for military members to receive lucrative rewards and benefits without paying for an annual fee. Chase and American Express both have military benefit packages, and USAA is available exclusively to military families.
Banks typically won’t know about your active-duty status until you tell them. In some cases, they’ll ask for supporting documents, while others will not.
Change to Fees and Benefits
Credit cards periodically change earning power, benefits and fees. What was once an excellent card could transform into an average value if too many features change at once. When the bank modifies your credit card, this is a perfect time to explain to your card’s issuer how these changes have impacted you. During these periods, telephone agents are more willing to waive fees because banks expect customers to be dissatisfied with higher fees, lower rewards or changing benefits.
Inquire About Spending Requirements
During your conversation with customer service, you may be offered a fee waiver if you meet certain spending limits. This helps the bank recover some of their revenue after waiving an annual fee. For cardholders, this scenario also provides extra benefits. Not only do you get to keep the card without paying a fee, but you’ll continue earning rewards on your purchases.
Ask If the Bank Will Match Another Offer
Banks offer welcome bonuses to attract new cardholders, so pay attention to offers from competing credit cards. When speaking with customer service, mention what other cards are offering and ask if they’ll match them. While they typically will not match the welcome bonus, the bank may be willing to waive your annual fee to keep you as a customer instead of lose you to another bank.
Call to Cancel Your Account
Like most companies, bank customer service has multiple levels of support. If you cannot get the first-level telephone agents to budge, tell them you want to close your account and would like to be transferred to the retention department. Higher-level customer service agents have more authority to waive fees in order to keep an account open.
When calling the retention department, Jon Nickel-D’Andrea, a credit card expert and blogger for No Mas Coach! , warns consumers to be careful with their words. “There’s a big difference between saying, ‘I’m considering closing my account,’ versus ‘I’d like to close my account.'”
An eager first-level agent may close your account immediately if you’re adamant about closing your account. This means you can avoid negotiating a retention offer to waive your fee or get additional benefits for keeping your account open.
[Read: Best Credit Cards.]
5 Alternatives to Waiving Your Credit Card’s Annual Fee
No matter how convincing your argument is, some banks will not waive the annual fee. While this can be disappointing, it doesn’t mean you’re out of options. There are other steps you can take if the bank is unwilling to work with you to remove or reduce the fee.
Accept a Retention Offer
When requesting a retention offer, waiving the annual fee isn’t the only option. In some cases, you may be offered a flat-rate reward amount or the ability to earn extra rewards based on your spending. For example, if you have a $95 annual fee, the bank may offer 10,000 miles to keep your account open. Depending on how much you value those miles, it may be worth it to pay the fee.
Another option is a retention offer based on how much you spend. Once you meet a minimum spending requirement, you could be provided with a flat-rate rewards amount or increased rewards capped at a certain dollar amount. In some cases, you may be able to choose between a fee waiver, bonus points or elevated rewards. Think about your upcoming spending needs to determine which offer would be most lucrative for your situation.
Use Perks to Offset the Annual Fee
Even if you can’t get the bank to waive the annual fee on your credit card, the perks you receive can offset the cost. While you’ll still need to pay the fee, your wallet won’t take much of a hit.
For example, some credit cards include annual credits on select purchases. The Platinum Card from American Express offers over $1,500 in credits across a variety of categories, the Chase Sapphire Reserve includes a $300 travel credit and the American Express Gold Card provides $120 in credits for both Uber Cash and dining. If you’re going to make those purchases anyway, these credits can offset those transactions and cover some or all of your credit card’s annual fee.
Downgrade to Another Credit Card
Banks often have variations of the same card, some with lower annual fees and others without one at all. Instead of paying an annual fee, you can request to downgrade the card to its no-annual-fee version. In most cases, you’ll keep the same credit card number when doing so.
This continuation of the existing account is helpful for your credit score in two ways. First, you retain your credit limit, which contributes to the credit utilization ratio, which is 30% of your credit score. Second, you retain the account’s history and age, which contributes to your overall credit.
Apply for a Credit Card With No Annual Fee
Evaluating your credit card options can help you find better offers that align with your current spending categories and levels. Instead of keeping your current card or downgrading it, you might be better off applying for a completely different credit card with no annual fee. Plus, you may be ready for different types of rewards, or you may want to earn miles and points from a different airline or hotel.
John Perri, travel advisor and blogger at JohnTheWanderer.com, typically recommends getting a new credit card. “A new card opens the possibility of earning a welcome bonus and qualifying for an intro APR offer. These benefits are typically reserved for new accounts, so you won’t receive them if you downgrade.”
Open a Card That Waives the First Year’s Annual Fee
Some credit cards waive the annual fee for the first year so customers can try out the benefits. When people use the benefits for a year, it gives them a real-life test of whether paying the annual fee is worth it or not.
For example, the Citi® / AAdvantage® Platinum Select® World Elite Mastercard® has a $0 introductory annual fee for the first year, then it’s $99 per year after that. Although cardholders won’t pay an annual fee when opening the card, they’ll have access to all benefits for a full 12 months before getting charged. This means they can earn the welcome bonus, the American Airlines AAdvantage miles on purchases and benefits when booking and flying with American Airlines.
[Read: Best Cash Back Credit Cards.]
What Are the Chances Your Annual Fee Will Be Waived?
Loyal customers who use their credit cards regularly, pay on time and have a good relationship with the bank have a decent chance of getting their annual fee waived. While you may be successful one year, the odds of getting it waived the second year decline. The bank counts on annual fees as part of its revenue, so it is typically unwilling to waive them every year.
Keep in mind that getting your annual fees waived can vary from person to person. Bank policies also change periodically, which can affect how successful you are. Even if you attempt all of these methods, the bank may be unwilling to budge. In that case, you’ll have to make a judgment call on whether the card’s earning power and benefits are worth the annual fee.
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Is It Possible to Get My Credit Card?s Annual Fee Waived?
originally appeared on usnews.com
