Avoid Credit Card Annual Fees: Just Charge $2,400 Per Year

Jesse has a credit card that he doesn’t use, but keeps open to help his credit score. Citibank has foiled his brilliant plan by adding a $60 annual fee. He can avoid the fee by charging at least $2,400 on the card each year.

We knew banks were going to start doing this. Citibank sent me a letter yesterday from the future (letter was dated February 13th) informing me that they are going to start charging a $60 annual fee on my Citi card starting April 1st. They will waive the fee if I spend more than $2400 in a 12 month period.

I’ve got an excellent history with Citibank but hardly ever use the card anymore except to keep it open for credit history purposes. I guess my only options are to pay the $60 fee for a dormant card or cancel the account.

The text of the letter is as follows:

February 13,2010

For your Citi Card ending in: XXXX

We’re writing to let you know about an important change we’re making to your account. Effective April 1, 2010, an annual fee of $60 is being added.

The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business. However, because we value you as a customer, we wanted to give you an opportunity to have the annual fee credited back to your account.

Here’s how it works. Each year, we’ll credit the $60 fee back to your account once you have made $2,400 in purchases during that year. That comes to an average of $200 in spending a month, an amount you can reach by using your card for purchases you already make, like gas, groceries, cell phone plans or your cable bill.

As always, you have the right to opt out of this change and close your account. Please read the Notice of Change in Terms and Right to opt Out beginning on the back of this letter so you are fully aware of all your account changes. If you have questions, call 1-866-915-9425.

Sincerely,

Ken Stork
Citibank (South Dakota), N.A.

Easy enough if you put regular expenses on your credit card and pay it off every month, but not everyone is interested in doing that. So what are your other options?

Some card issuers (including Citibank) can be persuaded to waive annual fees in special circumstances, and it may be worth giving Citibank a call to see if they will do that for you. However, it’s hard to make a case for why Citibank should want to keep you as a customer with a dormant card that earns them no money in either transaction fees or interest.

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