Hate paying annual credit card fees? Do this 1 move

Image source: Getty Images

The great thing about credit card is that they allow you to earn different rewards or cash back on your purchases. Often, you can take advantage of these benefits without having to pay anything in return.

But some credit cards impose a annual subscription on account holders. Annual fees may vary in cost. In some cases, you could pay $95 to hold a credit card. In other cases, your fees may be $250 or more.

If you have a credit card that charges annual fees, you may be tired of paying them. You might be inclined to cancel that card and replace it with one that doesn’t charge you money just to keep your account open. But before going down this road, there is another one worth considering.

You may have some leeway with these fees

The problem with closing a credit card is that it could negatively impact your credit score. One factor that goes into calculating this number is the length of your credit history. If you close a credit card you’ve had open for years, it could eventually lead to a shorter credit history, which could lead to a lower score. This is one of the reasons why you shouldn’t close a credit card so quickly.

Another reason is that use of credit also determines your credit score. Credit usage shows how much revolving credit you are using at one time. If you close a credit card with a generous spending limit, your total credit limit will decrease. This could increase your usage, which would affect your credit score.

That’s why canceling an annual fee credit card might not be as simple a solution as you might think. Before doing this, it pays to at least call your credit card issuer and ask for your annual fee to be waived.

Why would a credit card company do this? It’s simple: they want to retain you as a cardholder. If you’ve had an account in good standing for many years, your credit card issuer may agree to waive your annual fee or at least reduce it. It is worth asking this question.

Now, if you are a new account holder, this strategy may not work. To be clear, this may not work even if you’ve had the same credit card for a decade or more. But there’s no harm in asking, and waiving those charges could allow you to keep a credit card you otherwise love, while protecting your credit score from any hits.

Is the annual fee worth it?

Some annual dues are more than worth paying. Imagine that in exchange for a $95 annual fee, you could earn $1,000 in cash back over the course of a year on a card, instead of earning $500 in cash back for the same purchase activity on another card. In this case, the fees in question are more than profitable.

It is when you receive nothing in return for paying these fees that you should consider canceling the card in question. But don’t rush down this path until you try to get the fee waived or reduced.

The best credit card waives interest until 2023

If you have credit card debt, transfer it to this top balance transfer card guarantees you an introductory APR of 0% in 2023! Plus, you won’t pay any annual fees. These are just a few of the reasons why our experts consider this card a top choice to help you control your debt. Read our full review for free and apply in just 2 minutes.

Read our free review

We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.