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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.
Use this guide to learn more about credit card annual fees, including ways to avoid and reduce the costs.
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 contact your credit card company and ask to close the account before the anniversary of your account opening.
For example, say you got a credit card on 31 January 2020 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 31 January 2021 to avoid being charged an annual fee.
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.
If you’ve had the same credit card for years and want to cancel it, you can also use this approach to avoid paying another annual fee before you close the account.
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.
However, 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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