Avoiding annual fees on credit cards

There are many way of avoiding annual fees on credit cards. Two of the easiest are to simply use the credit card or negotiate the annual fee. However, many people opt to close the account without first considering how it would effect their credit score. Although the annual fee does add to the cost of having your credit card, it may also reduce your interest rates on other loans by increasing your credit score. This is why you should carefully consider your options before contacting your credit card company.

Use It

Many credit card companies waive their annual fee when a customer completes a specified number of transactions each year. You can consult the terms and conditions statement which came with your card, or simply call the company and ask. This can very widely, but some companies require as little as one transaction per year to waive the annual charge.

Relationship Building

If you have a good relationship with your credit card issuer it is more likely they will be willing to negotiate the annual fee. This means paying your bill on time and increasing your credit limit when possible. However, it is important not to over extend yourself when increasing your credit limit. Perhaps closing one account after increasing the limit on another would be a good way to balance this adjustment.

Negotiate

It never hurts to pick up the phone and ask your credit card company how to avoid their annual fees. This can be a quick and easy way to eliminate the annual fee from your credit card, but it will likely require an annual phone call from you. With some credit cards charging between $30 – $400 in annual fees, this is well worth your time on the phone.

Think! Then Act.

One of the most important things you must do is to consider your options and the effect each choice may have on your finances, before calling the credit card company. Should the representative be unwilling to negotiate your annual fee, it is very easy to threaten closing the account and moving your business to another bank. If you have other credit cards already, this may be an option, but it doesn’t mean you won’t suffer any repercussions. Closing the account removes the line of credit from your credit report and may affect your credit score. If the effect is significant, your interest rates on other loans may increase, costing your more than the annual fee on the credit card. Although this is a rare situation, it is worth considering before taking action.

Frank Jones

Frank Jones

Frank Jones has been an entrepreneur, writer, and student in the fields of restaurant management, information technology, philosophy, and political science since 1995. Having completed his B.S. in political science and philosophy at UNC-Asheville, he is continuing his study of transatlantic political science at UNC-Chapel Hill.

In addition to Debtors Unite, Frank Jones writes on a variety of topics for Demand Studios, Associated Content, and Jones PC Repair. He is the kind of student who takes Chemistry, Calculus, and Statistics as electives. This same thirst for knowledge which has darted him between studies in Computer Science, Electrical Engineering, Culinary Arts, Philosophy, and Political Science, also pushes his writing and research into many areas of interest and expertise. Managing his own personal debt, rebuilding his credit, and the entrepreneurial spirit he inherited from his father has provided Frank with some practical experience which is backed up with his research in these areas. Frank is always looking for new adventures in education and travel which is why he will be spending the second year of his masters studies at UPF in Barcelona.
Frank Jones

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