How to Plan Ahead for Annual Fees on your Credit Cards

Annual credit card fees are on the increase and a condition of some cards as they are issued. They can also appear as an unwelcome intrusion on your existing cards which you have been using without paying any such fee. You should give careful consideration before deciding to opt for a card which carries an annual fee or decide to pay one on your existing card.

Unless an annual fee is in place to give you some benefit or privilege which you believe it is worth paying for, then you really should not be paying a fee. The credit card issuer already profits each time you use your credit card as the retailer is charged merchant fees to accept your payment that way. You already pay by paying a higher price to the retailer for your goods, as he needs to recoup the merchant fee which the bank imposes on him for accepting their credit cards.

Thus even if you are the type of customer who never makes a cent for the bank by paying your monthly balance in full and never incurring interest, you are still paying a cost for the card which you carry.

Typically people carry more than one credit card, and potentially as annual credit card fees are gradually reintroduced, as they are currently being done, you could end up paying a fee on each card. As this is a likely scenario it may be worth considering reducing the number of credit cards you hold now. This will prevent it becoming the case that you end up paying a fee to retain each card, or negatively affect your credit score by cancelling them.

Although it will affect your score to cancel a card it is better to plan ahead and pare them down gradually, rather than being caught in the trap of a heap of new fees all at once, or a bigger drop in your credit score if you go for mass cancellation. Consider that if you hold 4 credit cards and each one introduces an annual fee of an average $50, do you really envisage paying $200 to keep hold of them all?

If the credit card company does catch you out and inform you an annual charge is being introduced then don’t just automatically pay it, but approach them to see if it is possible to have the charge waived. If you are a long standing customer with a good credit history they may be willing to do this. If they flatly refuse then you aren’t valued as a loyal customer and a change could well be in order. 

There is no point in asking if you have a large balance on your card, and you will probably have to pay the fee or look for a balance transfer card which is fee free. This means this is now a good time to reduce any outstanding credit card balances to put you in a better negotiating position to have fees waived if they are introduced.

Reducing your credit card holdings is a good move, and ideally one card which comes with an excellent cash back program to use for all your monthly payments is the astute way to deal with credit, make a profit, and retain an excellent credit rating.

Be prepared for your credit cards to start costing you an annual fee and be ready to deal with it by reducing your cards and avoiding the companies which have already started levying them. There will be cards which remain fee free as an enticement to the best credit card customers they want to attract and retain.