Can You Be Charged an Annual Fee Without Activating a Credit Card?

  Reviewed by: Ryan Cockerham, CISI Capital Markets and Corporate Finance      Updated November 08, 2018
  Written by: Victoria Lee Blackstone
Can You Be Charged an Annual Fee Without Activating a Credit Card?

Some credit card companies charge an annual fee to your account as soon as your line of credit is approved. That's even before you receive your card. This fee likely will appear on your first monthly statement, whether or not you've used your card or even activated it. It's not the activation that sets the annual fee in motion but the card approval. This protocol is somewhat similar to opening a checking account that carries a monthly maintenance fee. You'll see this fee on your first bank statement, regardless of whether you've written any checks or activated the debit card attached to the account.

Tips

  • If the credit card you applied for lists an annual fee in its terms of use, the chances are good that you will be responsible for this fee immediately upon the acceptance of your application, irrespective of whether or not you activate the card at any point.

Credit Card Fees

An annual fee for the privilege of using a particular card is just one of a number of potential fees that your card issuer could impose. Other costs could include activation, monthly maintenance and transaction fees. These fees, plus other charges, penalties and requirements, must be fully disclosed in your credit card agreement. A list of credit card fees is generally found in a Schumer Box which stipulates the terms of your card. With a little careful planning, you can avoid many of the fees associated with using a credit card. For example, if you pay your balance in full every month, you won't incur finance charges or interest fees and if you don't use your credit card to withdraw cash from an ATM, you won't have cash advance fees.

Cancelling Your Card

If you close your credit card account and a balance remains as a result of an annual fee - regardless of whether you activated the card - you must pay the fee or contact the company to ask to have it waived. Otherwise, non-payment of this fee will appear as a blemish on your credit record.

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Negotiating the Annual Fee

If your credit card agreement includes an annual fee, the issuing company is under no obligation to waive the fee simply because you might have misunderstood the terms, didn't read the credit card agreement or don't want to pay the fee. However, if you contact the company immediately after receiving a statement that contains this fee, you may be able to negotiate the waiving of the fee, especially if you have not used or activated your card. Even if the company's customer service agent does not waive the full fee, he may reduce the fee or offer an in-kind benefit, such as bonus points for travel charges that you can redeem for discounts.

When an Annual Fee Is Worth It

Some credit cards offer benefits that can offset the amount of an annual fee. For example, if you are a business traveler, using a credit card that allows you to accrue frequent-flier miles or points toward reduced or free hotel expenses may end up in the long run netting you more value than the annual fee you're paying to use the card. So before you decide to cancel an unused credit card because of an unexpected annual fee, check to see if the benefits outweigh the costs.

About the Author

Victoria Lee Blackstone was formerly with Freddie Mac’s mortgage acquisition department, where she funded multi-million-dollar loan pools for primary lending institutions, worked on a mortgage fraud task force and wrote the convertible ARM section of the company’s policies and procedures manual. Currently, Blackstone is a professional writer with expertise in the fields of mortgage, finance, budgeting and tax. She is the author of more than 2,000 published works for newspapers, magazines, online publications and individual clients.

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