When do you pay the annual fee on a credit card?

If you’ve got a $0 annual fee for the first year or want to keep track of ongoing costs, here’s what you need to know.

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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 activated the card. And you won't pay any annual fee if you get a credit card that offers no annual fee ever.

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 make note of the date you got the card, 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.

Tip: Find out what date the annual fee is due

If you want to cancel a credit card before the annual fee is charged, contact your credit card company and ask them when the annual fee is due. This will help you sort out your account and close it before the fee is added to your balance.

What is the difference between an annual fee and a monthly 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 American Express Cashback Card and no interest, flat fee cards from NAB, CommBank and Westpac.

Tip: Check how much a monthly fee will cost you each year

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.

What if I want to cancel the credit card after the
annual fee is charged?

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.

If you have questions about your annual fee, call your credit card company to talk about your options – they'll be able to let you know when it's charged, how long you'll have to pay it and anything else you need to know before you can cancel the card.

Other ways to avoid a credit card annual fee

  • Credit cards 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.
  • Promotional $0 annual fee for life offers. These offers are rare, but sometimes a credit card company will run a promotion that gives you $0 annual fee for life on a credit card that normally charges an annual fee. However, there are very few opportunities to get a $0 annual fee in this way.

Compare credit cards offering no annual fee

Name Product Annual fee Purchase rate Balance transfer rate
Kogan Money Black Card - Exclusive Offer
$0
20.99% p.a.
0% p.a. for 30 months
Save with a $0 annual fee and a 0% introductory rate on balance transfers. Plus, earn $50 Kogan.com Credit and uncapped rewards points.
Bankwest Zero Platinum Mastercard
$0
14.99% p.a.
0% p.a. for 34 months with 2% balance transfer fee
Get 0% p.a. on balance transfers for 34 months (with a 2% BT fee), ​an ongoing $0 annual fee and 0% foreign transaction fees.
St.George Vertigo Card
$0 annual fee for the first year ($55 p.a. thereafter)
13.99% p.a.
0% p.a. for 32 months
Get a 0% interest rate on balance transfers for 32 months (with no balance transfer fee) and a $0 annual fee for the first year.
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
$0 annual fee for the first year ($129 p.a. thereafter)
20.74% p.a.
0% p.a. for 28 months
Get 0% p.a. on balance transfers for 28 months (with no BT fee). Plus, $0 annual fee in the first year.
Bankwest Breeze Classic Mastercard
$0 annual fee for the first year ($49 p.a. thereafter)
0% p.a. for 15 months, reverts to 9.9% p.a.
0% p.a. for 15 months
Save with 0% p.a. on purchases and balance transfers for 15 months (with no BT fee). Plus, a $0 first-year annual fee.
St.George Vertigo Card - Purchase Offer
$0 annual fee for the first year ($55 p.a. thereafter)
0% p.a. for 18 months, reverts to 13.99% p.a.
Save with a 0% interest rate on purchases for 18 months and a $0 annual fee for the first year.
Westpac Low Rate Card - Cashback Offer
$0 annual fee for the first year ($59 p.a. thereafter)
13.74% p.a.
6.99% p.a. for 12 months
Get $400 cashback when you spend $4,000 on eligible purchases within the first 4 months. Plus, a $0 first-year annual fee.
NAB Low Rate Credit Card
$0 annual fee for the first year ($59 p.a. thereafter)
12.99% p.a.
0% p.a. for 32 months
Get a 0% interest rate on balance transfers for the first 32 months (with no BT fee). Plus, save with a $0 first-year annual fee.
ANZ Platinum Credit Card
$0 annual fee for the first year ($87 p.a. thereafter)
0% p.a. for 25 months, reverts to 20.24% p.a.
20.24% p.a.
Now offering Cashrewards Max. Receive a 0% purchase rate offer for 25 months and a $0 first-year annual fee. Plus, complimentary overseas travel and medical insurance.
Bankwest Breeze Platinum Mastercard
$0 annual fee for the first year ($69 p.a. thereafter)
0% p.a. for 15 months, reverts to 9.9% p.a.
0% p.a. for 15 months
Get 0% interest on purchases and balance transfers for 15 months, a $0 first-year annual fee and no foreign transaction fees.
American Express Velocity Escape Card
$0
20.74% p.a.
Get 0.75 points on your everyday purchases, uncapped, and a $0 annual fee for the life of the card.
ANZ Frequent Flyer Platinum
$0 annual fee for the first year ($295 p.a. thereafter)
20.24% p.a.
20.24% p.a.
Now offering Cashrewards Max. Receive 70,000 bonus Qantas Points when you spend $2,500 on eligible purchases within 3 months. Plus, a $0 first-year annual fee.
Bankwest Zero Mastercard
$0
14.99% p.a.
0% p.a. for 34 months with 2% balance transfer fee
Features an ongoing $0 annual fee and an introductory rate of 0% p.a. for 34 months on balance transfers (with a 2% BT fee).
ANZ Low Rate
$0 annual fee for the first year ($58 p.a. thereafter)
12.49% p.a.
0% p.a. for 30 months
Now eligible for Cashrewards Max. Save with 0% p.a. on balance transfers for 30 months (with no BT fee) and $0 first-year annual fee. Plus a 12.49% p.a. purchase interest rate.
Westpac Low Rate Card
$0 annual fee for the first year ($59 p.a. thereafter)
13.74% p.a.
0% p.a. for 28 months with 1% balance transfer fee
Save with a $0 annual fee for the first year, plus, a 0% interest rate on balance transfers for 28 months.
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Tips to save money on your credit card’s annual fee

If you have a credit card that charges an annual fee, here are some ways to keep the cost as low as possible:

  • 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 added cost 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.

Example: Working out if complimentary extras will balance out the cost of a card’s annual fee

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.

Images: Shutterstock

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