Our top picks of timely offers from our partnersMore details
Many of the highest-earning rewards credit cards have annual fees, which is an important factor to consider both before and after applying.
When you first open an annual fee credit card, you'll want to know when to expect the first fee so you can put money aside for the charge (which could be over $500). And beyond your first year, you'll want to know when to expect your recurring annual fee to hit your account so if you ever decide it isn't worth it, you can decide what to do in time.
A lot goes into this decision. Though you might have been excited to open your first travel rewards card a few years ago, your spending habits may have changed a lot since then. Maybe today you charge more groceries and gas than restaurants and flights, and if so, you are probably reconsidering whether you still want that travel card with an annual fee.
Below, we'll review when you can expect to receive a bill for your credit card's annual fee and what to do if you don't want to pay it anymore.
Credit card issuers may have different policies for when they charge annual fees, but they generally follow similar rules. More often than not, credit card annual fees will be billed as a one-time charge on your statement during the same month each year. Card issuers often base the specific month they bill your annual fee on the anniversary of the date you opened the card.
For instance, if you opened a card on April 5, 2020, you can expect to receive a bill for the annual fee on your April 2020 statement and every upcoming April statement.
There may be some cases where a card issuer will break up the annual fee into monthly installments, but this is rare. And if you open a card that isn't from a major issuer, you may have the annual fee deducted from your available credit limit.
For instance, the OpenSky® Secured Visa® Credit Card has a $35 annual fee, and the terms for the card state that the fee will be charged when you open an account and each year following the anniversary date of your account opening. Plus, the annual fee will reduce your available credit by $35. So if you open the OpenSky card and receive a $200 credit limit, your available credit will be reduced by $35 to $165.
If you no longer want to pay an annual fee for a credit card, there are a few actions you can take, which we list below.
As we mentioned earlier, an annual fee credit card may not be as valuable over time for a variety of reasons, such as a change in your spending habits. In that case, you may consider closing your credit card. But before you do, check out these alternative options.
- Ask for a retention offer: If you're second-guessing whether an annual fee is worthwhile, consider calling your card issuer and asking for a retention offer. This may provide you with a one-time fee waiver, lump sum of points or an offer similar to a welcome bonus where you earn rewards after spending a certain amount. You may be more likely to receive an offer if your account is in good standing and you've been a cardmember for a long time, though you may still luck out if you're new.
- Downgrade your card: If you don't get the retention offer, you may want to think about downgrading to a low annual fee or no annual fee card offered by your issuer. This can allow you to keep the account open and reduce any damage to your credit score. For example, if you have the Chase Sapphire Reserve® ($550), you may be able to downgrade to the Chase Sapphire Preferred® Card ($95).
- Cancel your card: This should be the last resort after you've tried the first two options. While experts generally don't recommend closing your credit card since it can negatively impact your credit score, there are some exceptions, such as paying a high annual fee. Review our six-step checklist before canceling your credit card.
Take note, if you want to cancel an annual fee card after you've recently been charged for it, you only have a certain amount of days (usually 30) from when the fee is billed to get a refund. If you cancel outside this window, the annual fee is non-refundable, at which point you may want to keep the card open for another year and see if you can make the most of its rewards.
- American Express Business Platinum Card relaunches with new perks, 120,000-point welcome offerBrett Holzhauer
- Here are the top 5 credit card bonuses available now that the Sapphire Preferred offer is goneBrett Holzhauer
- Aspiration launches first credit card: Earn cash back and plant trees with every purchaseBrett Holzhauer