While the main “hook” with which credit card companies snag you is the interest rate every card carries, credit companies also carry a bag full of other tricks used to squeeze money from the cardholder. Among these is the annual fee which many cards still carry. This article will discuss some ways to avoid these snags.
The annual fee is a type of fixed-fee associated with a credit card which provides extra revenue for the credit card company, though the use of annual fees has been declining. Often, a card with favorable interest rates may be tagged with higher annual fees and/or other snags in order to “balance the see-saw” for the credit company, and vice versa. In addition, a credit company may, in some cases, charge a fee to a cardholder who has not made a certain number of purchases with his or her card in the year in question. The amount of a particular card’s annual fee also depends on what class of card it is: premium or gold cards often have higher fees than basic cards.
The first tip on avoiding annual fees is so simple as to sound stupid: choose a card which has no annual fee. This is just another reason to read the terms and conditions associated with any credit card offer you consider, as well as those cards you own.
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If you already own a great number of credit cards, you may want to take another look at the terms of each card, consider how much utility you get out of each card compared to how much it costs to keep, and cancel cards which aren’t worth the costs. Do not take this to mean that maintaining multiple credit cards is useless; owning more than one card can offer one greater flexibility than owning a single card. The message to take home is that one should choose his or her card(s) with care.
One does not always have to go to the extreme of canceling a card to be free of annual fees associated with it; polite negotiation with credit card companies can pay off if you know how to handle such negotiations. Before we discuss the tactics which may be used, keep in mind the old proverb that you can catch more flies with honey than with vinegar: rudeness will get you nowhere.
A tactic that can be used if a card has no balance is to tell the credit card company that you wish to cancel a card because of its annual fees. The company may be willing to offer reduced fees, or cancel a year’s fees depending on its policies and the payment history of the one making the request. If these negotiations are fruitless, you may choose to cancel the card if you have no need to retain it. It is possible (but not certain by any means) that the credit card company will send you a letter offering to reinstate the card with no annual fees.
The above tactic can only be used for a card with zero balance; for cards with a balance a different bluff can be employed. Rather than threatening to close the account, tell the company that you would be willing to transfer more money onto the card if the annual fee is eliminated and that you may otherwise transfer the balance on the card in question to another card and close the account.
One can make his or her life easier if he or she is a good credit card owner, and a diligent credit card owner. Credit companies are aware of what is in one’s consumer credit report; they will consider this data as well as your payment history on the card in question when dealing with a cardholder. The first key to being a good cardholder is to be aware of the terms and conditions of your card(s); maintaining a good payment history will always aid one in his or her financial life. If you follow these guidelines, the nuisance of annual fees can be swatted away.