Credit card annual fees for points collectors are a fact of life. If you want a card that will earn you the most points, you’re almost certain to have to pay a fee with the card.
There are often offers that may waive the fee in the first year, but more often than not, you’ll be left to pay the fee once your first year is up. However, there’s no harm in asking your bank if there are any account retention offers available to you before the fee is charged.
This guide helps build a crowd-sourced list of banks, credit cards and tactics you can employ to help get your annual fees reduced or waived entirely. It’ll help you to understand and take advantage of if you decide to do the same.
What are your chances of getting your annual fee waived or reduced?
A key factor in your value to a bank is how much you use a card. Logic would dictate that the more you use a credit card, the more you are worth to a bank in merchant fees paid by the retailers you shop at. Although there’s no evidence of specific retention offers to back this up, that has to be a factor in how much a bank would want to keep your custom.
So if you have a card that you want to keep for the benefits or points earn into subsequent years after you’ve first signed up, you’ll probably have more chance of the bank wanting to keep you if you’ve actually used the card.
What you should consider before you call
When it comes to actually requesting a fee waiver, this would normally be done at the point of requesting a cancellation on the card, which is almost always over the phone.
(Instead of over the phone, you could also try using secure messaging in your bank’s message area to ensure the communication between you and your bank is clear. However, more often than not, I’ve found that the bank will just ask you to call them anyway.)
You’ll need to decide before you get on the phone whether you are willing to go through with a card cancellation there and then, or whether you are just testing the water.
Some of the main factors that would determine if you’re willing to go through with the cancellation are:
- How tied to the bank you are: do you have multiple products or a mortgage package which can’t be unbundled, for example (in which case, the rest of this guide is probably not so relevant)
- How close to the annual fee you are: the closer you are, the less time you have to make a decision
- How many points you are owed: if using a bank rewards program you will lose the points if you cancel your account, so transfer them out. If you are on a monthly direct-sweep card, you should wait until as soon after the account has swept the points over—or ask the phone agent if they can tell you whether cancelling your account will stop the next points sweep
- Whether you’ve used all your benefits: free flights, extra hotel nights and other travel benefits should be used before you cancel, if you can
- Are you relying on insurance included with the card: if so, consider the cost and act of taking out your own policy if you decide to cancel the card
- The inconvenience of cancelling: how many direct debits you have with the card that will need changing, and how much time you have to administer the changes
What to ask the bank
I’ve heard from many people about how they have dealt with their bank, and invariably being polite, clear and concise is the way to go. I’d suggest something like this gets the conversation off on the right foot:
My annual fee is due soon and I’m considering the various credit cards I currently hold. Before I make a decision to cancel this card, could you let me know if you can offer any incentives to keep it?
Express clearly that you are considering cancellation, and could be willing to go through with it. Be clear about the reason why you are considering cancelling, if asked. Have the card’s features changed since you originally applied for it, or the rewards program no longer preferred? If the bank doesn’t get good feedback, they don’t know why they are losing a customer.
You should also consider clearing the balance on your card before you call. This means you should be ready to go through with cancelling your account, if you decide to do so.
The new rules that came into effect in 2019
Note that since 1 January 2019, credit card rules have become stricter for lenders. They must provide an ability for credit cards to be cancelled online. In addition, the credit card provider is obliged to assist the cardholder in any of their requests. That means that requests for fee waivers can still be made.
So, for example, if the cardholder says, ‘I wish to close my card,’ then the provider must reasonably assist in doing this, meaning that they cannot proactively offer bonus points to retain the cardholder’s business.
However, if the cardholder says, ‘I’m thinking about closing my card, but would like to explore if you have any offers available to me before I decide to close,’ then a bonus retention offer is still OK.
What to expect from the bank
Your bank will usually be able to tell you immediately over the phone if they have an offer available to you. However, you may be transferred to someone whose job it is to handle cancellations specifically. An offer might include:
- A retention bonus, instead of a fee waiver (for example, bonus points or a balance transfer offer)
- A discounted annual fee
- A fully-waived annual fee
- No offer at all*
*No retention offer at all is quite common, so don’t get too disappointed if your bank doesn’t want to help you out and keep you as a customer.
The most important thing when approaching a conversation with your bank about your annual fee is to be prepared.
Firstly, you’ll need to do the maths so that you can determine whether or not it’s worth keeping the card at the full annual fee, a reduced one or only if it is completely waived.
Next, you’ll want to make sure you have used all of the available benefits attached to the card, such as free flight benefits or lounge passes. You’ll also want to consider transferring all of the points out of your account and paying off your balance.
Finally, when you do come to calling the bank, be clear in your request. Make sure it invites the bank to offer you something, using language like, ‘I’d like to explore if you have any offers available to me before I decide to close this card’.
Are you in the market for a new card? Check out our current rewards card offers, or our table of all the current points earn rates on every rewards card.
In the comments below, many have shared their experiences to help others know what their chances are in getting a fee waived or reduced for a specific card. Everyone’s circumstances with their bank differ, but it should give some idea on the various policies and offers that are out there. If you decide to share yours too, thanks!