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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: Drop one card, open a better one? Date:  8/29/2013  4:01 PM
Author:  Patzer Number:  307242 of 312161

My dad has a Key Bank credit card at 12.99% that charges him a $50 fee every year. He hasn't used it in a few years and it's been at $0 balance all that time. I've contacted them (with his permission) to see if they can lower the interest rate, but they say no.

If he always pays the balance in full, the interest rate is irrelevant. However, . . .

There's no point in him paying $50 a year for something he doesn't use. He does have a couple of other cards.

That's the heart of the matter. If he really doesn't use the card with the annual fee, he should cancel it to get rid of the fee. If he uses it for purchases, but always pays the bill in full, he should think about whether he can do what he needs to do with another card that doesn't have an annual fee. Absent some really appealing features on the $50 per year card, the answer will be that his other cards are just as good and he should cancel the one with the annual fee.

(I'm guessing you're going to tell me to ditch the whole plan.)

I'm telling you to ditch the plan of negotiating for interest rates on a zero balance. The effective way to negotiate for a zero annual fee is to cancel any card that has a non-zero annual fee* and get some other card that doesn't have a fee. I did that decades ago because of a $12 annual fee, and never looked back.


* This assumes the card does not give him other compensation that is of more value than the fee. For example, various people have reported having air miles cards with an annual fee, but getting a companion ticket once per year that saves them more than the cost of the fee.
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