How to get your annual fee waived

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Here’s the scenario: The annual fee on one of your cards has just posted to your account. It’s a fairly significant amount of money, and you aren’t sure if keeping the card is worth it.

On certain cards, the annual fee is waived for the first year. But otherwise, you can pay anywhere from under $100 to over $500 a year for a card’s annual fee. So, you’re thinking of calling the bank to ask if they can waive the fee.

If you’ve ever been in this position (and I imagine most of us with any of the best credit cards for travel have), you might be wondering what strategies you can use when calling in. Here’s what we suggest doing:

Ask the issuer to waive the annual fee

Call the number on the back of your card and being polite on this call can go a long way. Being a good customer helps your cause, too. So if you’ve used the cards frequently and paid your bills on time, the bank is more likely to want to keep your business.

You could mention that you’d like to keep the card because of the benefits, but compared to other similar cards it’s hard to justify paying the annual fee.

They may offer a bonus instead

If the bank won’t waive the annual fee they may offer you a statement credit or bonus points to cover a portion of the fee.

For example, I was once offered 5,000 AMEX Membership Rewards points and another 15,000 points after spending $3,000 within three months in exchange for keeping the American Express® Gold Card. The annual fee on this card is $250 (see rates & fees) and 20,000 points are worth at least $200.  So this bonus makes keeping the card a lot more enticing.

If you don’t get an offer you like, you can say you’d like to think it over. Then hang up and call back to get another agent who may be willing to give you a better offer. As with everything in the miles & points hobby, do the math when you receive an offer to determine if it’s a good deal.

What to know before you cancel your card

If the bank won’t waive your annual fee or offer a bonus to keep your business, follow these tips before canceling your card:

Don’t make the bank angry

Be sure you’ve taken the time to evaluate the card. We usually recommend folks hang onto a card for 9 to 10 months and then decide if it’s worth the annual fee. That’s because banks don’t like it when you sign-up for cards just to earn the bonus and then cancel right away. They give out these incentives because they want you to try the card.

Don’t lose your rewards

Bank points earning cards like The Platinum Card® from American Express and Chase Sapphire Preferred® Card will take away your points when you cancel. But you can avoid this by transferring your points to airline and hotel partners before you cancel! Here’s more about transferring Chase Ultimate Rewards points to partners along with information on transferring Amex Membership Rewards points to partners.

Consider switching to a no annual fee card

Canceling a card could impact your credit score. That’s because:

•  Your credit utilization ratio (ratio of the amount you owe to the total credit available to you) could increase once you cancel a card. This accounts for 30% of your credit score. However, the ratio can go back down when you apply for a new card.

• Your credit history (15% of your credit score) could decrease over the long term. Though this impact can be minimized by opening new accounts to replace them.  This is more of a concern for folks who are fairly new to credit cards.

So an alternative to closing your account, is switching to a no annual fee card like the Chase Freedom (no longer available) or Citi Rewards+® Card. Just note that usually, when you switch to a new card (instead of applying), you will not be offered a sign-up bonus.

The information for the Chase Freedom has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.

You never have to cancel a no-annual-fee card. And that helps you build a relationship with the bank and build a longer credit history.

Bottom line

If you’ve decided don’t want to pay the annual fee on a credit card, you can try calling the bank and asking nicely. They may waive the annual fee or offer you a bonus to keep you as a customer!

If you don’t like the offer you get, you can try hanging up, calling back, and speaking with another agent. But you may decide you still want to cancel your card. Before you close your account, be sure you won’t lose your points.

And don’t forget that you can ask if the bank can switch you to a card that has no annual fee. Just take into consideration the fact that you won’t be eligible for that card’s welcome offer.

For rates and fees of the Amex Gold, click here.