Tips for negotiating a rewards credit card’s annual fee

Paying the annual fee on a credit card doesn’t mean you’re wasting your money.

In fact, the top travel and rewards credit cards offer welcome bonuses that are worth considerably more than their annual fees, and that’s on top of the cardholder perks and benefits you can receive.

Case in point: The Chase Sapphire Preferred Card charges $95 per year, yet the sign-up bonus of 60,000 points (after spending $4,000 in the first 3 months) is worth $750 in travel through Chase Ultimate Rewards on its own. Meanwhile, the more luxurious Chase Sapphire Reserve charges a $550 annual fee, but the sign-up bonus (50,000 points after spending $4,000 in the first 3 months) is also worth $750 in travel through Chase Ultimate Rewards, and you get perks like up to a $100 Global Entry/TSA PreCheck credit every four years, Priority Pass Select membership (valued at $429), a $300 travel credit and more.

Still, a problem can arise when you can’t use the benefits your card offers – or when you cannot (or don’t want to) pay the annual fee anymore.

In that case, you should know credit card issuers can be surprisingly receptive to cardholders who may not be excited about paying their credit card’s annual fee another year. With this in mind, you have some options that can help you avoid annual fees, get something in return or switch credit cards altogether.

See related: When is a credit card annual fee worth it?

You may have more power than you think

According to Howard Dvorkin, CPA and chairman of Debt.com, it’s always worth it for consumers to negotiate their credit card fees or terms. Whether a consumer will get their fees waived is another question, but “it never hurts to ask,” he said.

This is especially true in light of the coronavirus pandemic. As we all know, credit card issuers have been fairly generous when it comes to offering struggling customers relief, with some extending options for deferred payments or waived fees. As an example, a March 2020 statement from Capital One CEO Rich Fairbank noted that the bank was offering assistance to its customers, such as “waiving fees or deferring payments on credit cards or auto loans.”

Dvorkin says consumers can improve their chances of getting their annual fee waived if they have a history of responsible credit use. In some cases, it may be possible to have an annual fee waived altogether, while in others, an account credit may be offered to take the sting out of the fee.

Some credit card issuers even have their own “retention offers” meant to entice you into keeping your card. For example, American Express is known for offering a set number of points for customers who agree to renew their card and pay an annual fee for another year. Sometimes a specific amount of spending is required on the card as well.

On the FlyerTalk website, you’ll even find a running guide of retention offers from several different card issuers, including Amex. After you dig through it, you can find that, as recently as January 2021, at least one person was offered 50,000 Membership Rewards points to renew their Platinum Card from American Express.

See related: Which cards earn American Express rewards points?

6 tips for negotiating annual fees

But how do you make sure you have as much leverage as possible? We interviewed the experts to find out their best tips for negotiating credit card fees:

1. Use the card

Lending expert John Li of Fig Loans says you’ll have the best chances at negotiating your credit card’s annual fee if you use your card frequently.

“At the end of the day, doing so makes the bank money, and a steady flow of transactions puts you in front of the credit card issuer as a worthy customer to build a long-term professional relationship with,” he says.

2. Be respectful

Dvorkin recommends keeping a level head before you pick up the phone. Take the time to state your case, but don’t fly off the handle if you don’t get your way.

“Credit card issuers get angry calls from cardholders all the time, so it helps consumers to be positive when calling to get a fee waived,” he says.

3. Negotiate by phone

While some card issuers like American Express have an online chat feature, you may have better luck negotiating with a customer service agent over the phone. In fact, phone agents can usually perform more services on your behalf versus agents you speak to via online chat.

4. Have a legitimate grievance

Nishank Khanna, CEO of business lender Clarify Capital, says you’ll have a better shot at negotiating if you have a compelling reason for not wanting to pay an annual fee.

“If you’re having this conversation with your lender to begin with, you’ll want to be able to articulate a logical reason for why you deserve to have the fee removed or reduced,” he says. “Customer service representatives are often receptive to legitimate reasons and may have a policy in place to help accommodate customers with specific concerns or circumstances.”

5. Leverage the competition

Khanna also says you can point to other card issuers that may have a better deal right now. Have competitors waived their fees? If you’re looking to knock off a fee on a travel credit card because you haven’t been able to use the card during the pandemic, for example, you should find out how other card issuers are handling the situation.

6. If you’re not satisfied, call again

Persistence can pay off when it comes to negotiating credit card fees and terms. Not only that, but you don’t have to accept the first “no” you receive. If you don’t get the answer you want, you can always try the famous “HUCA” method, which asks you to hang up and try again. You may be connected to a different agent who is more agreeable.

See related: Does applying for a credit card by phone boost approval odds?

What to do when the issuer won’t budge

If you are trying to negotiate an annual fee but can’t seem to make any progress, keep in mind that other options may make just as much sense.

For starters, Dvorkin says consumers who find they cannot negotiate their card’s annual fee should consider opening a credit card that doesn’t have an annual fee and closing their old one.

Note that closing a credit card can lower your credit score by reducing your overall available credit. Depending on how high the card’s credit limit is and what balances you have on other cards, this could raise your credit utilization ratio and lower your score. But this may be a risk worth taking if you can no longer afford your card’s annual fee.

Also, keep in mind some card issuers might let you downgrade your credit card to another card they offer that doesn’t charge an annual fee. You will probably earn a lower rewards rate and get fewer perks if you take this route, but moving your line of credit to a different card won’t cause damage to your credit score like closing an account can.