How Do You Pay Annual Fee On Credit Card

Citi Custom Cash Card

• Earn $200 in cash back after you spend $750 on purchases in the first 3 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
• 0% Intro APR on balance transfers and purchases for 15 months. After that, the variable APR will be 13.99% – 23.99%, based on your creditworthiness.
• Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter. Also, earn unlimited 1% cash back on all other purchases.
• No rotating bonus categories to sign up for â as your spending changes each billing cycle, your earn adjusts automatically when you spend in any of the eligible categories.
• No Annual Fee
• Citi will only issue one Citi Custom Cash Card account per person.

Is It Worth Paying An Annual Fee For A Credit Card

Here are some of the most common reasons why you might want a card with an annual fee:

• Bad or limited credit history: You dont have the best credit history, so you may need to settle for a card with a fee thats designed for poor or limited credit.
• Offset the fee with spending rewards: Youll spend enough to offset the annual fee, earning more rewards than you could with a no-fee card.
• A large introductory bonus: It has a big signup bonus for spending a certain amount in the first few months of account opening.
• Valuable travel perks: There are travel benefits that you want, like free hotel stays, airport lounge access, or membership in hotel and airline loyalty programs.
• Special card features: It has a particular feature that you need, like the ability to transfer points is a great choice for that).
• A downgrade path : Some cards allow you to downgrade to a lesser version, with the same account history and credit line but fewer rewards and benefits.

Well go over each of these reasons a bit, with examples showing how cards with annual fees can be worth the cost.

Credit cards with annual fees are good for two basic types of people, with different credit histories and :

Annual Credits Bonuses Or Free Nights

The annual bonus provided by select cards can also justify paying an annual fee. After all, these bonuses may cover most of the cards annual fee. Here are a few examples:

• : One free night award every year after your account anniversary, valid for a one-night hotel stay at a property with a redemption value up to 35,000 points
• American Express® Green Card : Up to $100 Clear credit each calendar year and up to $100 LoungeBuddy credit each calendar year
• Southwest Rapid Rewards® Premier Credit Card : 6,000 points every year on your cardmember anniversary

The information for the Hilton Aspire card and Amex Green Card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

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Chase Freedom Flex: Best For Dining

Why its great in one sentence: Along with a trio of permanent bonus categories that includes an impressive 3% cash back on dining and eligible food delivery services, the no-annual-fee Chase Freedom Flex card earns 5% cash back on up to $1,500 in combined purchases in rotating bonus categories each quarter.

This card is right for: People who want a card that earns bonus cash back both for dining and in rotating categories.

Highlights:

• Earn 5% cash back on up to $1,500 in combined purchases in rotating bonus categories each quarter you activate.
• Earn 3% cash back on dining including eligible food delivery services plus 3% at drugstores and 5% on travel purchases made through Chase Ultimate Rewards.
• Earn 1% cash back on all other purchases.
• Cash back can be transferred to airline and hotel travel programs when combined with select Chase Ultimate Rewards cards, such as the Chase Sapphire Preferred.
• 0% APR on all purchases for the first 15 months .
• No annual fee.

Sign-up bonus: Earn $200 bonus cash back after you spend $500 on purchases in your first three months after opening the account, plus 5% cash back on grocery store purchases on up to $12,000 spent in the first year.

The current Chase Freedom Flex bonus categories for October through December are PayPal and Walmart. That means you could earn as much as $75 in bonus cash back just by shopping at Walmart or paying for your online purchases via PayPal.

Switch To A Different Card

You could ask to switch to another card from the same issuer that doesnt charge an annual fee. This may be less of a hassle for you than canceling your card and applying for a new one with a different issuer. However, a no-fee card may not offer the same rewards, and youll want to find out if you can take your points or miles with you when you make the switch. If not, you may want to redeem them or transfer them to another rewards program before switching cards. Youre also unlikely to be eligible for any sign-up offers or welcome bonuses on the new card.

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When You Can Spend Enough On The Card To Earn Rewards Worth More Than The Annual Fee

Rewards can come as cash back, points, or miles, and if you spend enough to earn lots of them, the rewards alone can pay for your annual fee. If your card gives 1.5% back on purchases and the annual fee is $95, for instance, youll have to spend about $6,350 annually to break even with ongoing rewards alone.

Use United Mileageplus Miles To Pay Chase Card Annual Fees

HomeUse United MileagePlus Miles to Pay Chase Card Annual Fees

The value of travel rewards credit cards has been hit hard due to the coronavirus pandemic. Perhaps the hardest hit sector of the rewards credit card market is airline cards. With so many flights grounded, many customers are struggling to justify the high annual fees that come with some premium credit cards. Now Chase and United Airlines are joining forces to help combat this financial burden. Cardholders can now use United MileagePlus miles to pay their Chase credit card annual fees.

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Annual Fees That Don’t Pay For Themselves

Annual fees aren’t always a bad idea. Annual fees that don’t pay for themselves, however, are a waste of money and should be avoided. If you have a credit card with an annual fee, and that card doesn’t give you any more air miles, cash back, or benefits than a card with no fee, then it pays to dump that card.

What’s more, before you sign up for an annual fee card, research the benefits. And make sure you’re likely to reap them. A card offering lots of cash back for travel may not be a good pick for you if you don’t take many trips. In that case, you could end up paying an annual fee for no good reason.

How To Calculate When It’s Worthwhile To Pay An Annual Fee For A Credit Card

Before you open a credit card with an annual fee, you should calculate whether it’s worth the added expense.

Let’s take the Capital One® QuicksilverOne® Cash Rewards Credit Card, which has a $39 annual fee. Cardholders earn 1.5% cash back on every purchase. To figure out the amount of money you’d need to spend annually on the card to break even on the annual fee, divide $39 by .015 to get $2,600. If you plan on spending at least $2,600 a year on the card, then the $39 annual fee is worthwhile.

Calculations get a little bit harder when you’re looking at cards with bonus rewards rates and annual statement credits. You’ll have to consider whether you’ll take full advantage of the annual credits and also look at your yearly spend summary to see how much you spend in the bonus categories.

Here’s an example using the Chase Sapphire Reserve® and a sample annual spending budget of $22,126 created by location intelligence firm Esri. The Chase Sapphire Reserve® has a $550 annual fee, $300 annual travel credit, $60 annual DoorDash credit and offers 3X points on dining and travel and 1X points on all other purchases. If you take full advantage of the $300 travel credit and $60 DoorDash credit, the annual fee is effectively $190. Then if you consider the Priority Pass Select membership, valued at $429, you more than offset the $550 annual fee.

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When A Card With An Annual Fee Makes Sense

In some cases, a card with an annual fee might offer you a higher tier of rewards that makes better financial sense for your lifestyle. The key is to choose a card with perks that best suit you and is a match for your spending habits, and not to go strictly by what your friends or relatives may use.

Here are a few instances when paying an annual fee might be worthwhile.

How To Get A Credit Card’s Annual Fee Waived Or Reduced

If you’re second-guessing whether your credit card’s annual fee is still worthwhile, you can try asking for a retention offer. You may receive a one-time fee waiver, lump sum of points or an offer similar to a welcome bonus where you earn rewards after spending a certain amount.

To increase your chances of receiving a retention offer, call customer service and ask for the retention department. Then plead your case to the representative and state why you no longer get full value from your credit card. This may include using other cards more, a change in your spending habits or maybe the issuer has raised the annual fee. It could take a few calls to get a retention offer, and even then you may not receive one.

If you don’t receive a retention offer, you can ask to be downgraded to an alternative no annual fee credit card or a card with a lower annual fee. Financial experts don’t recommend closing credit cards since it can potentially have a negative impact to your credit score, but there can be exceptions if the cost of the card outweighs its benefits.

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Information about the Capital One® QuicksilverOne® Cash Rewards Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.

Editorial Note:

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How To Avoid An Annual Credit Card Fee

If you decide the annual fee isn’t worth it after the first year of using the card, you can close the account. Before you do, you should:

• Redeem any rewards you’ve accumulated.
• Check if you can switch to a no-fee credit card with the same issuer.

Switching to another credit card can allow you to avoid an annual fee without damaging your credit score. Downgrading your account may cost you some benefits or prevent you from earning any rewards at all. However, by downgrading, you’ve avoided the annual fee, which may make more financial sense if you were not using the rewards associated with it.

Some credit cards may waive the annual fee on a regular basis if you charge a certain amount on your credit card each year. Contact your credit card issuer to find out if your annual fee can be waived based on your account activity, payment history, or length of time as a customer.

Can You Get Similar Benefits From A Less Expensive Credit Card

As competition for new cardholders continues to heat up, lenders are increasingly adding lucrative perks to cards with lower fees. At one time, travel credits, such as application fee credits for TSA PreCheck or Global Entry, were typically found on premium cards with three-figure fees.

But now even lower-tier cards, such as the Capital One Venture Rewards Credit Card and the Bank of America® Premium Rewards® credit card, are offering these kinds of perks. Bank of Americas $95-annual-fee premium card even offers up to a $100 airline incidental statement credit annually.

Another great example is the Chase Sapphire Preferred Card. At $95 per year, the newly updated card boasts excellent rewards rates and now offers a $50 annual credit on hotel bookings made through the Ultimate Rewards portal. The annual credit alone covers more than half of the annual fee.

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Why You Can Trust Bankrate

At Bankrate, we have a mission to demystify the credit cards industry regardless or where you are in your journey and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to:

• Meet you wherever you are in your credit card journey to guide your information search and help you understand your options.
• Consistently provide up-to-date, reliable market information so you’re well-equipped to make confident decisions.
• Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you.

At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next.

You Need To Build Credit

If you have poor or limited credit history, it can be challenging to qualify for a credit card without an annual fee. If you only qualify for a credit card with an annual fee, it can be worthwhile to pay this fee and use your credit card to build a better credit history by making your payments on time and in full. Paying an annual fee to boost your credit can be well worth it.

Credible makes it easy to compare credit cardsside by side and find the one that meets your needs.

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Is It Worth It To Pay An Annual Fee For A Credit Card

If youre hesitant about paying an annual fee, its worth noting that in some instances it can make sense to pay for a credit card. As always, it depends on your financial situation and goals, so only you can decide if a credit card with an annual fee is a good fit for you. Here are a few situations when it might make sense to get a card with an annual fee.

Example: Interest Rate Increase

Say you have a promotional interest rate of 4% for the first 6 months that you have a credit card, which will increase to a standard rate of 19% after the first 6 months. But because you miss your minimum monthly payments during the first 6 months, your interest rate increases to 24%. This would seem like a 20% increase over the promotional interest rate.

Check with your credit card issuer about how much your interest rate will increase if you miss your required monthly minimum payments. This information is usually provided in your credit agreement or information box included in the credit card application.

Federally regulated financial institutions such as banks must notify you before an interest rate increase takes effect.

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When Are Annual Fees Charged

During your first year as a cardholder, most credit card annual fees are charged on the last day of the month that youre approved. Sometimes it will be charged as soon as your account is opened. In the following years, itll be charged around the same time.

Less commonly, a cards annual fee might be charged in monthly installments.

Its worth noting that if you cancel or downgrade a card within a certain time period after paying the annual fee, you might get a refund, though it may be prorated.

Annual fee policies vary, so if youre uncertain how yours works, simply contact your issuer and they should be able to tell you.

When Credit Card Annual Fees Are Charged

Many credit cards have annual fees, especially travel credit cards and premier cards. In fact, if you are offered a valuable sign-up bonus with your new card, theres a chance that you will also pay a fairly high annual fee.

Although your eyes might be on the prize the sign-up bonus its important that you also note how much the card will cost you.

This can come in the form of interest if you arent diligent about paying your balance in full each month or an annual fee that you pay every year you are a cardholder.

In addition to the annual fee, you should be aware of a couple of things: How much is the annual fee and when do you pay the annual fee on the credit card?

Is the annual fee charged as soon as you get the card? Is it waived for a certain amount of time? Or does it appear on your statement a year after you receive the card?

Quick answer: It depends on the card issuer. Commonly, annual fees are first charged within the two billing cycles and charged again every 12 months.

Heres what you should look for when it comes to annual fees and credit cards.

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