Your 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 an introductory $0 annual fee in the first year, the standard annual fee will be charged for the first time around 12 months from when you activated the card.
Use this guide to learn more about credit card annual fees, including ways to avoid and reduce the costs.
Compare credit cards with no annual fee
How can I avoid paying a credit card’s annual fee?
In most cases, you can’t avoid paying an annual fee unless you cancel the card before the annual fee is due. If you want to do this, make sure you note the day you got the card, and pay off your balance in full before a year has passed. Contact the provider to close the account, leaving enough time for your request to be processed before the anniversary of your account opening rolls around and the fee is charged.
If you prefer not to do this, you can:
- 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.
- Get a credit card with an annual fee waiver. Some credit cards come with an annual fee waiver for the first year. But starting from the second year, you’ll have to pay the annual fee.
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’s charged. Once the annual fee is added to your balance, pay it off to avoid incurring interest.
- Check if you’re eligible for a fee waiver. Call your credit card provider and ask if there are any options for fee waivers on your card. You may be rewarded for having more than one product with the same company, such as a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) along with your credit card account.
- Take advantage of complimentary extras. If your card comes with benefits such as rewards or complimentary insurance, this value could offset the cost of the card’s annual fee. However, you should determine whether this is true beforehand to make sure if getting a particular card is actually worth it.
Example: Do the complimentary extras that come with a card balance out its annual fee?
Say you have an airline credit card with a $95 annual fee and one free checked bag. If you travel often, you could save $30 on your first checked bag per flight. After 2 flights, you could offset the annual fee. But if you rarely fly, a card with no annual fee could be a better choice.
While many credit cards come with annual fees, there are a wide range of no annual fee cards on the market or cards that simply waive the annual fee in the first year. However, other features such as interest rates, complimentary extras and rewards can also affect a card’s overall value.
Check out our guide on how to avoid credit card fees to find out about more great ways to save.