How To Get Rid Of Annual Credit Card Fees

I'll being this blog with two basic assumptions:

1. People enjoy credit cards with benefits (cash back, miles, points, etc...)

2. People don't enjoy having to pay annual credit card fees.

Sure buying things on credit is great - you don't have to pay for it on the spot, sometimes you get up to 60 days for something, and if you're a reckless spender you can use it to buy things you can't even truly afford!

Buying things on credit cards that reward you with extra bonuses is even better. Personally, I own four different credit cards - Citicard's American Airlines card, Chase's United Airlines card, Chase's Marriott card, and the Chase Freedom card.

"Daniel, why so many credit cards?" you might ask.

First off, I'll mention the Chase Freedom card, since this one has no annual fee. I only use this one for gas, groceries, and the occasional plunge into the hell that is fast food. This particular card offers triple points for purchases made in these three categories. While it takes 6,000 points (a.k.a. $6,000 spent) to earn 5,000 United Airline miles (which is obviously not as good of a deal as the United Airlines card itself, which rewards one mile per dollar spent), if you only make triple point purchases, you can actually reach 6,000 points by only spending $2,000. Granted, I don't drive much or eat fast food very often, so it takes a while to achieve 6,000 points. But since the card has no annual fee there's no reason not to keep it around.

Now on to my other three cards, each of which has an annual fee. Let's face it; annual fees are just plain silly. We all know credit card companies take a cut out of every purchase you make, and we also know they make a majority of their money from ridiculous APR fees on late payments. So what's with the silly annual fees? They're already making plenty of money just by having you use their plastic. I suppose they could argue the fees weed out those who would simply apply for the card and not use it, but then why not implement a minimum annual usage amount that once surpassed results in a waived annual fee?

My American Airlines card charges $50 per year, United charges $60, and the Marriott card charges $30. $30!?!? What's the point? Well, regardless of whether or not there IS a point, I simply refuse to pay these fees...and now I'm going to teach you how to get out of them as well.

First, a few prerequisites...

One, you must have good credit and pay your credit card bill on time. While it's no secret that credit card companies ABSOLUTELY LOVE IT when you don't pay on time (so they can rip you off with ridiculous APR fees), they'll pretend that they prefer customers with good credit when it best suits them. Trying to get your annual fee waived is one of these instances.

Second, you must have a back-up credit card or be prepared to go without a credit card. Calling out these company's bluffs on annual fees doesn't always work. In this case, you cancel the card. Under no circumstances do you back down from your threat to cancel if they won't refund the annual fee.

OK, now we're ready to get started.

To begin, whenever you sign up for a new card, make a note of the sign-up date somewhere where you’ll be able to find it later - this will allow you to be prepared for the time that annual fee is going to hit. Just about every major card waives the annual fee for the first year, so they expect you to be sleeping when the renewal comes up 12 months later and shows up rather unremarkably on the monthly statement. Credit card companies certainly don't go out of their way to let you know the annual fee has hit, it's up to YOU to be on the lookout.

It's 12 months later, and the $30/$50/$60/$1,000,000 annual fee has hit. Now it's time for action. Call the company up and tell them you just noticed their cards annual fee on your statement. You're not happy about this. In fact, you don't even understand why they charge an annual fee, your _________ card (insert name of a card with no annual fee, it doesn't really matter if you actually have this card or not...for me, it's Chase Freedom) doesn't have a fee, why should this one? Furthermore, you've been getting offer after offer in the mail for various other similar credit cards, offering amazing incentives (20,000 miles after the first purchase, 20,000 hotel points after the first purchase, etc...) that your card doesn't, with the first year's fee waived. Also, if it’s an airline miles card, feel free to complain about the current state of the airline industry…it’s a consumer’s rite of passage in today’s day and age.

In summary, make it clear that there's really no reason for you to keep this card when you could sign up for a new one and get all of these benefits. Now it's time to drop the bomb - either waive the annual fee or I'm going to cancel this card!

What happens next is typically one of two things. The first scenario is the person on the phone will look up your account, notice that you use the card regularly and always pay on time, and offer to send you a certificate in the mail that is good for a credit equal to the amount of the card's annual fee (this is what the American Airlines card does). Granted you'll have to pay the $50 fee up front (on your current statement), wait for the certificate to arrive in the mail, fill it out, and mail it back in...but when all is said and done you're saving $50 and in today's economy who couldn't use an extra $50? Not too mention you fought the big bad credit card company AND WON!!!

Scenario two is that the person will say that while they understand your aversion to annual fees, there is nothing they can do. They will then ask if you'd like to be transferred to the cancellation department, to which you respond, "Yes, please." Do not fear, typically this is just a bluff and you are there to call the bluff. When transferred to the "cancellation department" you simply repeat your story and desire to have the card cancelled. Again, one of two things will happen. Under normal circumstances, the representative will offer to refund the annual fee via mailed certificate.

"But what do I do if they refuse to refund my fee?" you ask. YOU CANCEL.

This is where having another credit card comes into play. In reality, you don't need their card...you have a backup. One time Chase wouldn't refund my annual fee, so I cancelled the card. And guess what? One month later I was getting junk mail from the same company, for the same card, offering 20,000 United miles after my first purchase and no annual fee for the first year. So I just signed up again.

So far in my experience, using this simple advice has gotten the annual fee reversed all but one time. There's absolutely no reason to pay an annual fee on any credit card. Credit card companies certainly aren't hurting for money, so why give them more? These companies make a lot of money off of silly annual fees, but it is now time for the consumer to fight back!

Onward march and down with annual credit card fees, I say!