A credit card annual fee is usually charged when you first activate the account, and then around the same time every 12 months after that.
If you have a card that offers a $0 annual fee in the first year, you won't have to pay an annual fee until around 12 months after you activate the card. And, of course, you won't pay any annual fee if you get a credit card that offers no annual fee ever.
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.
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 2022 that offered a $0 annual fee in the first year and then charged a $250 annual fee after that. If you decided the $250 annual fee wasn't worth it for you, then you would need to cancel the card before 1 January 2023 to avoid being charged an annual fee.
A credit card annual fee is a yearly charge that banks and other financial institutions apply to some accounts. A credit card monthly fee is similar to an annual fee, but is charged each month instead of once a year. Both annual fees and monthly account fees are separate from any interest charges that may apply to your card.
Annual fees are more common on credit cards, but a number of new cards have launched in the last couple of years that have monthly fees – such as the CommBank Ultimate Awards Credit Card and no interest, flat fee cards from NAB, CommBank and Westpac.
A monthly fee can help space out the account costs, but it's still useful to check how much it will cost you each year – especially when you're comparing cards.
For example, a card that costs $10 a month is equivalent to a $120 annual fee. Sometimes, you can also get the monthly fees waived by meeting a set of requirements, such as paying the full balance by the statement due date or meeting a spend requirement.
First thing's first: You can cancel a credit card at any time, as long as the balance is $0. So if the annual fee has already been charged, you'll usually need to pay it (and any other balance on the card) before you can cancel the 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% |
If you have a credit card that charges an annual fee, here are some ways to keep the cost as low as possible:
Say you have a credit card with a $99 annual fee and complimentary overseas travel insurance. If you travel overseas every year and usually pay more than $99 for your insurance, then this perk would offset the card’s annual fee.
But if you rarely travel overseas or tend to find cheaper travel insurance options, you might find a card with a lower annual fee or $0 annual fee is more affordable for you.
While most credit cards come with annual fees, there is a range of options that offer $0 annual fees for the first year or for life. However, other features such as the interest rates, complimentary extras and rewards can also affect a card’s overall value.
So if you’re looking for a new credit card, make sure you think about what features are worth the most to you and then compare a range of options to help you find one that fits your goals.
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