e have a tangled love-hate relationship with credit cards. We all love the buy now, pay later scheme and the convenience, privileges, and perks that credit cards provide. Similarly, we equally hate the hefty fees that come with it. Credit cards have several fees attached, including annual fees, late fees, processing fees, foreign transaction fees, and more. These fees can add up and take money out of your pocket. So, is it possible to waive these fees? In this article, we talk about how you can waive credit card annual fees and late fees. Let's get started!
What Is an Annual Fee?
An annual fee is an amount you must pay for using your credit card and its benefits every year until the card is closed. Some credit cards don't have any annual fees. But, most credit cards have these fees to compensate against the additional benefits given with the cards, such as cashback, rewards, and so on. Most credit card companies offer no annual fees for the introductory period, whereas some have different amounts for the initial and regular periods. Typically, it can range between $50 to $700 a year.
Are Annual Fees Worth for You?
With so many credit cards available that have no annual fee, you may wonder whether paying the yearly fee is worthwhile. But, as the saying goes, good things come at a price. The same goes for a credit card with annual fees. You get extra benefits and privileges that you wouldn't get otherwise with a no-fee credit card. These benefits include travel insurance, auto insurance, cash back, reward points, credit points, and welcome bonuses. In some cases, these benefits outweigh the cost, making using annual fee credit cards profitable. But then it all boils down to your spending habits, lifestyle, and how you use your credit card.
Here are some scenarios when a credit card with an annual fee is worth the benefits:
- You use a credit card most of the time.
- You can offset the annual fee with its rewards and cashback.
- There is a big welcome bonus that exceeds the annual fee.
- You are a big spender. Annual fee cards target the big spenders; the more you spend, the more cashback you will receive.
- Additional perks and benefits, such as travel insurance, auto insurance, etc., outweigh the annual fee.
Here are some scenarios when it's not worth paying the credit card annual fee:
- You don't use credit cards often.
- You don't earn enough cashback to cover the cost.
- The perks and bonuses are not valuable/usable for you.
- You are just a beginner trying to establish credit.
- The card does not fit your lifestyle and spending habits.
- The welcome bonus does not offset the annual fee.
- You are not a big spender.
But, if you have already purchased a credit card with an annual fee and it's not worth the benefits you have received. Or, you are going through other financial circumstances and looking for ways to waive annual fees. One question might be running through your head:
Can Annual Fees Be Waived?
In short, yes, but it depends. All you need to ask your credit card company if they can waive the annual fee for you. But here are a few things to keep in mind before you make that call:
Factors Affecting Your Chances of Fee Waiver
Multiple factors come into play when it comes to annual fee waivers. Here are some essential factors:
The amount of the annual fee
If your annual fee is lower than average, it is likely to be waived. But the credit card issuer won't let you off the hook if the annual charge is high. This is because the yearly fee plays a significant role in covering the expense of the card's benefits. The more benefits the card has, the more annual fee it will charge. Thus, there is a good possibility you may have your annual fee waived if it is less than $100.
Your payment history
Generally, annual fee waivers are a common reward offered by credit card companies to their responsible cardholders. If you are one of them and consistently pay your balance in full each month, there is a high chance that your annual fee may be waived. Equally important, your credit card debt should always be within your credit limit.
The usage of the credit card
The credit card issuer will look into how profitable a customer you are before waiving the annual fee. If you are spending and using your credit card most often, chances are that you will likely get the extra perks, including the annual fee waiver.
If you are a member of the Armed forces and serving actively in the military, then there is good news for you. Servicemembers Civil Relief Act has capped the interest and fees to protect active-duty service personnel from financial hardships. Most credit card issuers will not charge military members annual or other fees. Thus, you can ask the credit card company to waive your annual fee and a copy of your military order to prove your eligibility. Learn more here.
What if You Cannot Waive Your Annual Fee?
Well, there is no guarantee that your annual fee will be waived. It all boils down to your credit history, amount, and credit card company policy, among other variables. But it doesn't hurt to try. Even if you cannot waive your annual fee, here are some options you can choose:
Request an extra bonus
Some credit card companies won't waive the annual fee but will give you a bonus instead. Annual fees are okay if you can offset the price with the rewards earned. If you earn more cashback and rewards, you might even be making a profit from it. Thus, do some math and determine if it's worth it.
Change your credit card
If you have figured out that the annual fees are not worth it, you can ask the credit card issuer to switch it to a no-annual-fee card with a valid reason. Most of the time, they will exchange your credit card with other cheaper options.
Cancel your card
Canceling the credit card should be your last resort if the credit card issuer doesn't cooperate with you to either give a bonus or switch the card. Then you can opt to cancel the card. Cancellation is not a good idea since it will harm your credit score. But keeping the card is only possible if the annual fee is worth the bonus, and you cannot switch the credit card. Your credit score might drop, but it's fine if you won't pay the annual fee for the card you don't use.
What Is a Late Fee?
If you don't pay at least the minimum balance on your credit card each month, your card's issuer will charge you a late fee. The credit card company and the credit card's terms determine the fee. Some issuers charge a flat amount, whereas some charge a percentage of your total bill. However, the law limits the late fee to a maximum of $29 for the first offense and $40 for subsequent offenses.
If you are charged a late fee, it will apply to your next billing statement, raising your total minimum payment due. Thus, late fees might become a never-ending spiral that traps you in expensive debt. The penalty interest charged on the late fees can go up as high as 30% APR.
You won't only experience fees, but your credit history and score will also take a significant hit. Paying your credit card on time is the simplest way to avoid being charged a late fee. However, we acknowledge that, as humans, we are fallible. Credit card payment delays may happen to even the most responsible cardholders. So, you've missed the due date on your credit card, and now you're on the hook for a hefty late fee. One question probably is running through your mind:
Can Late Fees Be Waived?
Yes. Late fees can be waived but only once in a lifetime. If this is your first time missing a credit card payment, the credit card company may forgive you and waive the late fees, but if this is a common occurrence, you will not be forgiven.
Most cardholders need to be aware that their credit card company may be willing to forgive the fee if they have a valid explanation for their first late payment. Make sure you give sound reasoning and highlight that you are a responsible cardholder. It can never hurt to ask a credit card issuer to waive a fee. But before you make that call, consider the following steps:
Verify the late fee
Verifying whether the late fee has been charged to your account is important. Generally, the late fee is charged after a few days of the missed payments. If you are late by a day or two, there is a high chance that the late fee will be waived as it has not been charged to the account yet. However, if the late fee has been charged, there is less chance of the waiver since it can be a tedious task for the company to refund the amount.
Call customer service
Financial difficulties can happen to anyone. In most cases, late fees may be waived if you explain why you were late with your payment. You should contact your credit card provider and explain the matter to a customer service agent. After then, the company will review your payment history; if this is your first time being late, the company may offer you a last chance and waive your late fee. However, getting in touch with them is pointless if you've already missed many other payments.
Pay your bill immediately.
After you have missed a payment and are charged the late fee, if you cannot waive the amount, the best thing to do is to pay the payment bill as soon as possible. Doing so will show the company you are responsible and save you from paying a hefty interest rate on the outstanding amount and late fee. Credit card companies often wait until the end of the payment cycle before reporting to the credit bureaus. For instance, your credit card history might not be affected if your credit card payment is due on the 18th and you paid on the 20th.
The heavy fees of owning a credit card can be hefty on your pocket. But, if you are a valued customer with good payment history, high usage, or are in the military, chances are you can waive the fee. All it takes is the initiative to ask for the waiver. The waiver is conditional and depends on your profile and your standing with your credit card company. But it won't hurt to ask them. Who knows, one phone call and you can save hundreds of dollars.
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