Can You Cancel a Credit Card & Avoid the Annual Fee?

[UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned below.]

Rewards credit card users love earning valuable points, miles and cash back with their cards, but they hate the annual fees that many of the top cards require. Naturally, many are left to wonder if there is a way to close their account after getting their rewards to avoid paying its annual fee.

In fact, the annual fee is billed in advance, and cardholders are usually able to close their accounts and receive a credit for the fee paid. For example, Citi allows cardholders close their accounts and receive a credit within 37 days of their annual fee being billed. In other instances, credit card issuers will issue customers a pro-rated refund for any unused portion of the annual fee paid. But closing the card doesn’t have to be your only option.

Affordable Alternatives to Canceling Your Card

If cardholders want to avoid paying an annual fee, they should consider asking for it to be waived before closing their credit card account. In fact, they may not even have to ask. When a customer calls the card issuer to close their account, most card issuers will send them to the retentions department where the customer will be asked why. Cardholders who reply that the annual fee is too high will often have that fee waived, or receive a statement credit of equal size, in an effort by card issuers to retain the account.

Other retention offers can include points or miles worth as much as, or more than, the cost of the annual fee. Finally, credit card issuers might suggest a similar card that has no annual fee, but one with less generous rewards or benefits.

Another strategy for avoiding a credit card’s annual fee is to use rewards to do so. For example, American Express allows cardholders to pay their card’s annual fee with Membership Rewards points, however its points are only worth a half-cent each when redeemed in this way. In contrast, points are worth one cent each when put toward travel reservations, or potentially even more when transferred to airline miles.

Better yet, United Airlines allows customers of its MileagePlus cards from Chase the ability to redeem their frequent flier miles for a credit toward the card’s annual fee. When doing so, miles are worth .8 cents each, which is still less value than a skilled traveler might get from a frequent flier award. In addition, Chase allows customers to redeem their Ultimate Rewards points for statement credits at a rate of one cent per point redeemed, so 9,500 points would be required to pay off the $95 annual fee for the Chase Sapphire Preferred, Ink Bold or Ink Plus cards.

Shopping Around

When cardholders are unable to have their annual fee waived, and they no longer feel that paying the fee is worth the rewards or benefits offered, it will make sense to cancel the card to avoid the fee. This is especially true when cardholders consider all of the reward cards currently being offered with no annual fee for the first year. So when credit card users are not particularly impressed by the benefits of a particular card, they can close that account to avoid the annual fee, and apply for a competing card that has no annual fee for the first year.

For instance, the Capital One Venture Rewards and the Barclaycard Arrival Plus compete with each other by offering cardholders double miles on all purchases, where each mile is worth one cent each as statement credits towards travel expenses. These cards have annual fees of $95 and $89 dollars respectively, but both cards offer to waive the annual fee for new applicants for their first year.

Credit card users are fortunate to enjoy an extremely competitive marketplace where their business is highly valued. So when annual fees become unaffordable, there are always plenty of alternatives.

Finally, it’s important for cardholders to be aware of how closing their accounts and applying for new credit can affect their credit scores. If a consumer carries a balance on other cards and closes one account, that can lower the total available credit — effectively increasing their debt utilization. Debt usage is the second most important factor in a credit score, contributing about 30% to the overall score. Opening another card may help, especially if the credit line is about the same, however it’s important to only apply for credit you need. Applying for credit is a smaller factor in a credit score — about 10% of it — and lender inquiries will remain on your credit report for two years. Ultimately, it’s best to keep a low balance (or pay in full), make your payments on time every time, and shop for credit sparingly to help build credit and maintain it. If you want to see how your credit cards are affecting your credit scores, you can get your free credit scores from, updated every 14 days.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

Image: Anatoliy Babiy

You Might Also Like

A woman sitting on a couch
There’s nothing fun about declaring bankruptcy, but those w... Read More

March 16, 2021

Credit Cards

Life can be unpredictable, and you never know exactly what you ma... Read More

March 16, 2021

Credit Cards

A woman looks at her laptop computer with a thoughtful look on her face.
Credit cards play a significant role in your financial life—fro... Read More

March 16, 2021

Credit Cards receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.

Hello, Reader!

Thanks for checking out We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline,, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of in general and they result in more traffic to us as well.

Our Business Model’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to are also able to register for a free account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Editorial Team