What is a Credit Card Annual Fee, and Can You Waive It?

Credit cards are your entry point to more convenient and secured cashless transactions and allow you to accumulate points and rewards that you can convert to lifestyle perks. But owning a credit card also requires wise spending habits to keep your debt from ballooning at the end of each month.

Credit card fees are part of card ownership, but they can rack up your bill if you're not careful with your spending. One of these fees is your credit card annual fee.

What is a credit card annual fee?

Your annual credit card fee works like a subscription fee, meaning it's the rate you pay to continue enjoying your credit card’s facilities, services, and benefits, such as rewards, cashback, air miles, and other perks. As such, credit cards with greater perks typically have higher annual fees.

The annual fee pays for the maintenance and administration of your credit card, whether or not you carry a balance on your card.

When do you pay your credit card annual fee?

Your annual fee is usually billed once every year, on the same month you got your card, although you can arrange to have it divided into several affordable installments. The cost will appear in your statement of account for that month, so you can pay it with the rest of your bill.

If your bank decides to increase your annual fee, you should receive a notification at least 90 days before the new fee is implemented. You may also need to revisit your credit card contract or agreement to consider other options, such as rejecting the increase and downgrading your card.

Is it worth paying an annual fee?

Some consider a credit card annual fee an unnecessary expense on top of their bill. However, it may be worth paying a few extra bucks if it means you'll get to enjoy rewards that enrich your lifestyle.

The higher the annual fee is, the more benefits you get. These usually come in air miles, cashback, store discounts, or points you can exchange for goods or services.

If these benefits exceed a year's worth of annual fee, then you're getting more than what you paid for.

Ultimately, it is a matter of evaluating your spending habits and lifestyle to see if the rewards and perks offered outweigh the additional charge.

How to waive the credit card annual fee

If you don't intend to use your credit card's rewards program and are keen on waiving the annual fee, here are 3 things you can do.

1. Wait for "no annual fee" promos before applying
   Some credit card companies hold limited promos where you can apply for a credit card with no annual fee. This is the perfect time to get a credit card if you only want to try out that specific issuer's service.
   
   Remember, though, that most of these promos are only valid for the first year. To keep the no-annual-fee perk, you must meet specific requirements established by the bank. Additionally, you still need to pay other fees aside from the annual charge. But with that taken care of, that's one worry off your bill.
2. Meet the minimum spend requirement
   Some credit card companies offer you the chance to waive your annual fee if you spend a certain amount. Most of the time, the waiver only lasts one year, then you have to qualify the following year again.
   
   If you got the no-annual-fee waiver as a sign-up incentive, work to achieve the requirements that will allow you to keep the perk.
   
   You may also have higher chances of waiving your annual fee when you keep a good payment record, so that's one thing to note.
3. Apply for credit cards with no annual fees
   Lastly, the most convenient option is to apply for a credit card that doesn't charge an annual fee. You can find multiple credit cards with no annual fees in the Philippines. One of these is RCBC. RCBC's No Annual Fee For Life! promo applies to various cards for a minimum spend quota.

Choose and Spend Wisely

Having a credit card is a financial investment and responsibility. It should serve as a convenient payment method to take your shopping experience to the next level and not give you more reason to stress over your monthly bill.

Take the time to research and find the best credit card option. Remember to weigh the pros and cons of each card from each issuer to ensure you're getting the one for your lifestyle and spending habits.