I’m a big fan of using rewards cards to pay for everyday purchases. As you probably know I switched from using Air Miles as my main rewards program to cash back. I use a cash back card that pays 4% on all gas and grocery purchases, and a travel rewards card that pays 2% on everything else.
My only issue with these cards is the annual fees. I pay over $200 per year in annual fees while others with less lucrative rewards cards pay no annual fees.
Obviously I’ve done the math and I still come out ahead with both cards after paying the annual fees – this year I’m on track to earn around $1,300 on cards that cost about $200.
But wouldn’t it be nice if I didn’t have to pay the fee at all?
Loyalty Should Be Rewarded
One thing that I don’t like about companies in general (not just credit card companies) is that they don’t reward their loyal customers. They focus all their efforts on growing their business, with little incentive for long-standing customers who have used their products/services for years.
There’s nothing wrong with spending a lot of time and effort on gaining new customers, reaching new audiences and expanding a client list – after all, that’s essentially how a business expands.
But what about loyal customers like myself who always pay the bill on time, rarely have any issues/concerns and constantly use the same product(s) year after year – shouldn’t I be rewarded for that?
Waive My Annual Fee
I started wondering if it was even possible for a credit card company to waive an annual fee. They don’t ever advertise it anywhere and I haven’t heard much about it from other customers. But if I could reduce my costs each year by just a little bit I’d consider that a small win.
I called Scotiabank first since I use their card for all gas and grocery purchases and have been happy with getting 4% cash back, but I’m not too pleased with the $99 annual fee.
I quickly learnt that it’s tough to negotiate to waive an annual fee when the company doesn’t get much from me – I never carry a balance so I don’t pay any interest, I don’t bank with Scotia and for the first year the fee was waived. And on top of that – I’ve earned around $500 in cash back.
After some back and forth with their loyalty department, I was able to get an account credit for $90 – not the total annual fee, but still not bad.
Next up was Capital One. I have the Capital One Aspire Travel World Mastercard and I use it to earn 2% back on all purchases. The card is great but has an annual fee of $120. Again, I found this negotiation to be tough since I earn 2% back and I also get 10,000 reward miles annually (equal to $100) which means the annual fee nets out to $20. I also don’t pay any interest on it.
It was a tough negotiation but I was able to get a $100 account credit – not the $120 I was looking for but I’ll take it.
In total both phone calls took around 45 minutes and saved me just under $200. It’s not a big amount on an annual basis but I consider it another small win, and I’m happy I won’t have to pay the full annual fee.
This year I’m on track to earn $1,300 for using two rewards cards and with the account credits my returns will be even higher.
- Be willing to follow through. One of the things that helped my case was that I called to discuss the annual fee and was willing to cancel the card because of it. If you’re going to call to cancel your card because you don’t agree with the annual fee – always be willing to follow through.
- Be polite. When I talked to customer service I was polite and I think it helped my case; I’ve heard from numerous people that it doesn’t get you anywhere by being rude or impolite and in fact you may end up with less than if you were polite.
- Know the market. Negotiating to waive a credit card fee is tough if you don’t pay any interest or other costs, yet earn hundreds of dollars in rewards every year. I focused on other cards that had incentives for new customers with better rewards, no annual fee or both. Do some quick research on comparable cards and mention this during your discussion. Your stance should be: why would I continue to pay for a less lucrative card when another company is offering a better card with no annual fee?
- Mention your other products/services you have with the bank. I’ve noticed with the big banks that they’re quite willing to waive their fees so long as you have other products/services with them. If you have a mortgage, insurance, bank accounts or investments with a bank – definitely mention this when discussing your card. For example, RBC will waive the annual fee on a Westjet RBC World Elite Mastercard if you hold a specific RBC bank account. Banks look at the entire picture with a client and the more dealings you have with a specific bank, the more likely you are to have them waive an annual credit card fee.
- Highlight what you have paid. If you have paid the annual fee for years or pay interest on your credit card – don’t be afraid to mention this. The more you can mention that you’ve already paid for other things (and are aware of it) the more likely it is you’ll have your annual credit card fee waived.
I managed to get about $200 back by negotiating an annual fee waiver, and you can do the same as long as you follow the tips mentioned above.
For those who are determined to cancel their cards, you may have a chance to get your annual fee credited back. I learnt that once an annual fee is charged to your account you have a small period of time after to cancel the card and have it credited back to your account. For Capital One I was told I had 30 days and for Scotia I was told it was 60 days. Either way, if you’re thinking of cancelling you should make sure you have collected all the rewards you can and there’s still time to get your annual fee credited back.