6 Steps to Negotiating Your Credit Card Annual Fee

retention offer tips

Retention Offer Tips, 6 Steps to Negotiating Your Credit Card Annual Fee

We all love those great credit card deals that come with generous sign up miles, points or cash back bonuses. But the best deals out there usually come from credit cards that also have an annual fee. Sometimes those fees are waived for the first year and sometimes they are not, but one thing is for sure… there’s always room for negotiation. Whether you’re churning credit cards, or just want to keep one of your everyday credit cards, it never hurts to make a 2 minute call or chat. It can end up saving you $95 or even $695. That’s a pretty decent pay-rate!

Banks make a lot of money from their long-term customers who make their payments on time. Even if you never pay interest on a balance, the lifetime value of having you as a customer is a big number. Even if you’re not a long time customer, due to the high cost of gaining a new customer, they are generally willing to spend to retain existing customers. Keeping you happy is much cheaper than finding a replacement, so you do have negotiating power to avoid account annual fees.

1. Do your homework!

  • Know your credit card’s annual fee. This is basic, but if you say the wrong number, even if it’s off by a few dollars, it makes you look uninformed
  • Use the length of your business relationship if you’ve had this card for a long time
  • Know the benefits of the card, and their value to you. (Maybe you fly often and they have offer free baggage check. If you fly 3 times a year x $25, that’s $75 that you should take into consideration)
  • Know the value of the card’s points or miles
  • See how much you have spent on the card over the last year.

2. Chat up the reps!

I noted this in my recon tips as well, but this is very easy to do and it increases your chances drastically. Just think if it were you answering the phone. If you had $95 to give away that day, would you give it to a nicer person to to someone who is cocky, demanding and rude.

3. Ask politely

If you have done your homework, you’ll be able yo mention a few perks about the card and explain that you would love to continue using it. Ask politely for the fee to be waived. If they say that they are not authorized for such waivers, very politely ask for them to look again, or ask for a supervisor or manager.

4. Don’t give up easily

If the answer is NO at first, don’t give up right away. Ask again if they’re sure there’s nothing to be done. If a full fee refund is out of the question, then ask if they can do a partial refund or if they can offer you anything else that might offset some of the annual fee

5. Do the math, consider your options

So if a full refund is denied, they might make you some other offers. If you did your homework, some quick basic math should come in handy. These are some offers that you might receive

  • Partial Statement Credit – Subtract the credit from the annual fee and decide if that discounted annual fee is worth keeping the card
  • Bonus Points – Calculate the value of the points, subtract that from the annual fee and decide if that discounted annual fee is worth keeping the card. Also make sure that you can fulfill any spending requirements that might come with those bonus points
  • Downgrade – You can also downgrade your card to a different type of card that has a lesser or no annual fee. When this happens, the bank generally keeps your same account number and simply mails you out a different type of card. Make sure you can keep your points/miles.

6. Last Resort… Close your account

The final option is to just close your account. The primary benefit here is avoiding the annual fee, but you need to weigh that against the potential impact on your credit score. The more cards you have and the longer your total credit history, the smaller the impact of closing an account. Before you take this option, you should also try hanging up and calling back to see if a different agent can offer you a better deal.

Guru’s Wrap-up

I have been successful a few times, but I have also been turned down often. There’s no full proof approach, but you should always try. Tell us your failed attempts and your success stories.

Do you have any other tips? Let us know!

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