How To Waive A Credit Card Annual Fee

Most credit cards that offer lucrative benefits and rewards come with a catch: an annual fee. An annual fee is paid yearly, allowing you to use the credit card and gain access to specific rewards, benefits and perks. Some of these credit card perks, like statement credits, lounge access, bonus points or cash back, can be remunerative enough to justify the fee. The fee typically appears on your statement after you open the card and shows up on your statement each year thereafter.

The key when it comes to annual fees is to make sure to take advantage of all or most of the card’s benefits so the value outweighs the cost of the annual fee. Doing so effectively cancels out the annual fee, meaning you come out on top.

Still, paying an annual fee, especially a high one—some annual fees are upwards of $600—can be frustrating. The good news? With a little bit of time and work, you might be able to get your annual fee waived.

How To Get a Credit Card Annual Fee Waived

Ensure Your Account Is in Good Standing

The first thing to consider when attempting to get that credit card annual fee waived is your account status.

Having an account in good standing means that you’re abiding by the terms of your credit card agreement, are paying off your balance on time and aren’t missing payments. If your account is in good standing, you have more chips to bargain with when it comes to getting the annual fee waived.

Set a Calendar Alert for the Annual Fee

We’ve all had that frustrating moment where you forget the annual fee is coming and then see it on your statement.

Setting reminder alerts for just before your annual fee hits is an easy way to ensure you never forget it’s coming. This is especially useful if you have more than one credit card with an annual fee and you want to remember when each fee will be charged.

Although you still might be able to argue the annual fee after it hits, your best chance at success is calling before it processes—this way, you have more options if you can’t get the fee waived, like canceling or downgrading your card, so you won’t have to pay.

Call Your Credit Card Company

This is where the fun begins. It’s best to avoid online chats and simply call the number on the back of your credit card. Once you identify yourself and get a human on the phone, it’s time to start negotiating.

Ask for a Retention Offer

It’s time to put it all out there—ask the representative if there are any retention offers available or if they can waive the fee. Be ready to explain why you’d like the fee waived or why you’d like a retention offer. You can tout your account’s good status or the number of years you’ve been a cardholder or with that bank.

If that doesn’t work, you could always tell the rep you’re thinking of canceling the card because the annual fee is too high. It may be helpful to be rather vague here because if you state you’re definitely closing the account if they won’t waive the fee, you should be ready to actually close the account. Note that this can lower your credit, so think carefully before using this technique.

Remember that a retention offer may not actually waive the fee, though it can in some cases. Instead, you may be offered additional bonus points for a certain amount of spend (in addition to paying the fee), a discounted fee or other offers.

Be Respectful

It goes without saying that you should always be friendly with the rep. Being abusive, rude or threatening is never okay, and definitely won’t help your case.

Try Again

Oftentimes, you may have to call a few times or speak to a couple of different representatives before getting a retention offer. So, don’t get discouraged if you can’t get the fee waived on your first attempt—be ready to call back more than once.

How To Avoid Credit Card Annual Fees

If you don’t want to negotiate your credit card annual fee, there are a few simple ways to avoid the annual fee in the first place.

Look Into Military Benefits

Some credit issuers, including American Express, Capital One and Chase, offer Servicemembers Civil Relief Act (SCRA) benefits to active military personnel and their family members. Depending on the issuer, these benefits could include waived annual fees.

If you qualify for SCRA benefits, it may be worth calling your credit card issuer to see what perks are available to you. In some cases, you may be asked to provide documentation establishing your active duty status, so make sure you have that readily available.

Downgrade Your Card

You can always call your credit card company and downgrade your card to a card with no annual fee. Just make sure to confirm with the representative that you won’t lose any points or miles earned when doing so.

Cancel Your Card

This option should be a last resort because it may negatively affect your credit if you close a card you’ve held for a long time. However, if you really find you aren’t using the card or reaping its benefits, canceling your card—especially to avoid a hefty annual fee—could be the right move.

Make Sure To Utilize the Perks That Make the Fee Worth It

This option isn’t necessarily about avoiding the annual fee but ensuring you utilize the perks and benefits of the card to outweigh the fee. You should try to do this with all your credit cards, but it often takes time and research.

For example, if you hold the Chase Sapphire Reserve®, you’ll be paying an annual fee of $550. However, if you utilize the following benefits, you’ll end up gaining more back than the price of the annual fee:

• $300 annual travel credit
• Priority Pass membership. The card’s Prestige membership, which offers unlimited visits, costs $469 on its own.
• Global Entry, NEXUS or TSA PreCheck $100 credit every four years

This particular card offers further benefits, but just taking advantage of these puts you ahead of the fee, assuming you’re a frequent traveler. In most cases, ensuring you understand all the benefits of the card and how they best fit your current spending and life situation can help you figure out if the annual fee is worth it.

How To Pick No Annual Fee Credit Cards

Selecting a no annual fee credit card comes down to two options: Picking a card that waives the fee the first year or selecting a card that never charges an annual fee.

The best way to decide is to weigh the perks of the card—or the option to cancel it after year one—with the possibility of an annual fee to decide if it’s worth the cost.

Pick a Card That Waives the Annual Fee for the First Year

Some cards come with an annual fee that’s waived the first year. This is an easy way to test out the card and see if you’ll use the benefits before committing to paying the fee for the second year. If you find you aren’t utilizing the card’s perks or don’t like the card, you can always cancel it before the fee hits the second year.

For example, the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®* annual fee is $0 intro annual fee for the first year, then $99. If you’re a frequent American Airlines traveler who often checks a bag, the annual fee could be worth it, as the card offers perks like the first checked back free on domestic AA flights for you and up to four companions on the same reservation, as well as preferred boarding.

Chase’s United℠ Explorer Card charges a $0 intro annual fee for the first year, then $95. This could be worth it if you often travel on United, as the first checked bag is free on United flights for you and a companion, plus you’ll receive priority boarding.

Pick a Card With No Annual Fee (Ever)

If you’re really against paying an annual fee, are new to credit cards in general or are trying to build credit, you may not want to deal with a yearly fee. And that’s okay—there are options for you.

One of our favorite no annual fee credit cards is the Discover it® Cash Back, which includes 5% cash back on everyday purchases at different places each quarter up to a quarterly maximum of $1,500 in spending when activated. Plus, earn unlimited 1% cash back on all other purchases – automatically. Another worthwhile option is the Chase Freedom Flex℠, which offers 5% cash back on up to $1,500 in combined purchases in categories that rotate quarterly (requires activation), 5% cash back on travel purchased through Chase Travel℠, 3% cash back on dining and drugstores and 1% cash back on all other purchases.

Bottom Line

Annual fees might be justified if you’re getting enough benefits out of your card, but if not, you have options. Call your issuer and see if they’ll waive or reduce the fee. Consider a no annual fee card or downgrading to another product with your issuer with a smaller fee. As a last resort, you can cancel your card, but you should do your research before taking this route as it can potentially damage your credit score. Whatever the case, understanding your card’s benefits—and whether or not you’re getting value from them—is essential in order to maximize the cards in your wallet.