What is a Credit Card Annual Fee?
A credit card annual fee is a fee that is charged automatically once a year to your credit card account for having the convenience of using a credit card.
Cards with an Annual Fee
Not all credit cards charge an annual fee. Credit cards that is more likely to have annual fees include premium credit cards, reward credit cards and secured credit cards.
An annual fee then increases the cost of having a credit card, so if you are being charged an annual fee you need to make sure the benefits of having one exceed the cost.
How is the Annual Fee Charged?
The annual fee is charged once a year usually during a specific month of the year. This
will usually be around the anniversary of your card. The annual fee might also be divided up and assessed monthly.
Avoiding an Annual Fee
An annual fee could be waived in the first year. After the first year the fee is charged automatically. If you decide that the fee is not worth it then you can close the account, but you first need to see what impact this will have on your credit report and ensure that you redeem any rewards first.
You can also switch to a different credit card from the same issuer that doesn’t have an annual fee.
If you downgrade your account then you may lose some benefits and your rewards rate might not be the same.
There are some credit cards that will allow you to avoid the annual fee when you charge a certain amount on your credit card each year.
You should contact your credit card issuer to find out how you can have your annual fee waived.