When do you pay the annual fee on a credit card?
You'll have to pay your credit card's annual fee when you activate the card, or after the first statement period. And you'll get charged the fee every year around the same time.
Key takeaways
- A credit card annual fee is usually charged when you first activate the account. The fee is added to your balance.
- Cards with higher annual fees offer more perks and benefits. If you use these, it can be well worth paying the fee.
- And there are some cards that have no annual fee at all.
How is the annual fee charged?
Most card companies put the annual fee on your card balance. Some charge the fee when you open the account or at the end of the first statement period.
When the fee is added to your balance you can pay it off over time. But you will be charged interest if you don't pay it off before the interest-free period ends (if the card has an interest-free period).
If you don't pay the annual fee off on time it could end up being much more expensive.
When do banks and credit card companies charge the annual card fee?
Here's how some of the major credit card providers handle annual fees.
- American Express. You pay the annual fee each year in the month of your card anniversary.
- ANZ. Some cards waive the annual fee in the first year.
- St.George/Bank of Melbourne/BankSA. The annual card fee is charged each year on the anniversary of your first statement date after activating the card.
- Commonwealth Bank. The bank charges monthly rather than an annual fee on many cards. So instead of a $72 annual fee you pay $6 a month. You can avoid the monthly fee on many cards by spending a certain amount each month.
- NAB. You pay the annual fee when you accept the credit card agreement and then annually in the same month in future years.
- Westpac. Some Westpac cards charge a monthly fee. If your card has an annual fee you pay it when you activate the card account. In the following years the annual fee is charged on the anniversary of the first statement period following the activation of your card.
How can I avoid paying a credit card annual fee?
If you have a credit card that offers no annual fee in the first year, you can avoid this cost by cancelling the account within the first 12 months. To do this, you’ll need to pay off your full balance and then close the account before the anniversary of your account opening.
For example, say you got a credit card on 1 January 2025 that offered a $0 annual fee in the first year. You would need to cancel the card before 1 January 2026 to avoid being charged an annual fee in the second year.
What if I want to cancel the credit card after the annual fee is charged?
You can cancel a credit card at any time, as long as the balance is $0. Once you've been charged the annual fee you'll have to pay it (and any unpaid balance) before cancelling the card.
It is possible to get part of the annual fee refunded if you're cancelling a card. But this seems to vary by card provider and your own situation.
"When my credit card anniversary rolled around, so did an annual fee. I was already planning to switch cards, so I called to get the fee refunded, but was unsuccessful. Rather than accepting this as the final answer, I made a subsequent call later that same day. The second person I spoke with immediately offered to refund the fee. It just goes to show, if you don't get the answer you're hoping for the first time, it absolutely pays to try again and get a second opinion."
Other ways to avoid a credit card annual fee
- Get a credit card with no annual fee for life. A selection of credit cards offer no annual fee for life, giving you a way to avoid this cost on an ongoing basis.
- Annual fee waivers. Some credit cards offer to waive or refund the cost of the annual fee or monthly fee when you meet certain conditions, such as spending a set amount each month or year or not carrying a balance. You can check your credit card's terms and conditions or ask the provider to find out if this type of waiver is available on your current card.
- Home loan packages. Some banks offer to waive a credit card’s annual fee when you request the card as part of a home package.
Finder survey: What type of no annual fee offer do Australians have with their credit card?
| Response | |
|---|---|
| Ongoing $0 annual fee | 65.81% |
| Annual fee that's waived if you meet certain conditions | 14.34% |
| $0 annual fee just for the first year | 13.24% |
| Annual fee that's waived for certain customers (eg. a home loan package) | 4.78% |
| Other | 1.84% |
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
Tips to save money on your credit card’s annual fee
- Pay the annual fee as soon as it is charged. Once the annual fee is added to your balance, it will attract interest charges at the standard rate for your card. You can avoid this by paying off the annual fee as soon as it’s charged.
- Check if you’re eligible for a fee waiver. Call your credit card company and ask if there are any options for fee waivers on your card. Sometimes, you might be eligible for one without realising it.
- Use complimentary extras. If your card comes with benefits such as rewards or complimentary insurance, the value you get from using them could help balance out the cost of the annual fee. But it’s a good idea to estimate the value of these perks to make sure they are actually worth it.
"The value you get from a credit card must outweigh the fee in my opinion. I pay over $300 for my credit card's annual fee. It's very expensive, but for me it's worth it. The card lets me earn points on my spending, which I redeem for reward flights. A couple of domestic reward flights each year with the points I earn more than makes up for the fee. Plus I get flight credit that offsets part of the fee."
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