Those darn credit card annual fees

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Many who are new to this travel hacking game are concerned, for the right reasons, “what’s the credit card annual fee?” First instinct tells them, “I don’t want a credit card with annual fees.” However many of these travel rewards credit cards with lucrative bonus points, the banks, or the card issuer, more often would do the following:
  • charge an annual fee; or
  • waive the annual fee on the first year; or
  • or, offer certain cards with NO annual fees
But I’d be lying to you if I were to just flat out and say that “I love paying annual fees” – I don’t.

No pain, no gain

If you put up your blinders and say that you don’t want any cards that charge annual fees, nothing wrong with that. But, just know that there are so many opportunities with credit cards that charge annual fees, so I suggest looking at the big picture – the cost vs. benefits.

What does Jason have

For me, I have credit cards with $0 annual fees, and cards with fees as low as $49 to as high as $550 per year. But I make sure to utilize (most, if not all of the credits or perks tied to these cards)
  • free hotel nights
  • dining credit
  • airline fee reimbursement
  • Global Entry/TSA Precheck credit
  • food delivery credit (UberEats, DoorDash)
  • airline lounge access
  • Travel protection, purchase protection, return protection
  • upgrade to hotel status
  • and so much more

Annual Fees are not considered a purchase

You cannot count your AF as part of your minimum spend. It’s a fee, it’s a charge for having the card, for being entitled to the benefits of the card.

Do I keep the cards year after year

This is a case by case strategy. Some cards are worth keeping year over year. Others, I would say, if there are NO annual fees, I just hold on to the card, keep them in my sock drawer, and not have to use them – no harm. Other cards, if the cost outweighs the benefits, then I re-strategize…downgrade, or my last resort is to cancel the card.

Possible strategy

Sign up for a card with an annual fee, meet the minimum spend, earn the sign up bonus points, keep the card during the 1st year, when it’s time to pay the next
year’s annual fee, ask the bank for an option to do a product change to “another” card that has NO annual fee.

Another annual free strategy

When your annual fee comes due, and you’re on the fence about keeping the card due to the fees, you could ask the credit card issuer if they offer any incentives in keeping the card. They will usually NOT waive the annual fee just like that…expect a quid pro quo – they’ll give you something for something. For instance, they’ll give X amount of points or statement credit, but you’d have to spend X amount within a certain time period.

How about you? What are your thoughts when it comes to annual fees?

 

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