What is an Annual Credit Card Fee, and How Can I Avoid It?
Sep 26, 2023
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Credit cards can be a handy financial tool, but they can also come with several fees and charges. One fee that many cardmembers dread is the annual fee. While some cards may offer great rewards or perks, the annual fee can end up costing you more than you earn. Let's explore what an annual credit card fee is and provide you with some ways to avoid it.
What is an annual credit card fee?
An annual credit card fee is a yearly charge for having a credit card. This fee can vary depending on the credit card type you have and the benefits that come with it. Some credit cards may offer great rewards but, at the same time, may also come with a higher annual fee. Not all credit cards have this fee, but some banks may charge it to help cover the cost of maintaining your account.
Whether it’s a Visa or MasterCard annual fee, there may be a way to avoid this additional cost. So, if you're considering applying for one of the best credit cards in Canada, make sure to read the terms and conditions carefully to see if there's an annual fee involved.
How to avoid a credit card’s annual fee
While some annual fees are reasonable, others can be very high and may significantly affect your credit card rewards. Here are some tips to help you save money by avoiding an annual credit card fee:
1) Opt for a no-annual-fee card
One of the surefire ways to avoid the annual credit card fee is to opt for a card with no fee. Some issuers waive the yearly maintenance fee, leaving you with more money at your disposal. Research your options to find the best card for your lifestyle, as some no-fee credit cards may have lesser rewards programs.
2) Ask your card issuer if they can waive the fee
If you have a credit card that charges an annual fee, you can ask your issuer to waive it. This method can work if you’re a long-time customer or have an excellent payment history. Be sure to have a valid reason for why you want the fee waived, such as financial hardship.
3) Try a card with the first year’s annual fee waived
Another way to avoid an annual fee is to choose a credit card that waives the annual fee in the first year. Many credit card companies offer this incentive to attract new customers. But keep in mind that you’ll have to pay the annual fee after the first year.
4) Earn enough rewards to outweigh the annual fee
If your credit card charges an annual fee, try to earn enough rewards to outweigh the cost of the fee. Some credit cards offer high rewards in specific categories, such as gas or groceries. If you spend enough in these categories to earn back more than the total annual fee, you'll essentially have a no-annual-fee card.
5) Switch your current card
If you're tired of paying an annual fee and your credit card issuer won't waive it, you might consider switching to a new card. Look for a credit card that offers no annual fees or one that provides a lower annual fee and better benefits than your current card. Don't be scared to switch credit cards as long as you pay off any debt you owe.
The bottom line
Paying an annual credit card fee can be a nuisance. Thankfully, there are several ways to avoid it. Opting for a no-fee card, asking your credit card issuer to waive the fee, trying a card with the first year’s annual fee waived, earning enough rewards to outweigh the annual fee, or switching your current card are some viable options. By following these tips, you may be able to save money and truly enjoy the benefits of your credit card.
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