How to Avoid Credit Card Minimum Annual Purchases Fees

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As we wrote about it last year, credit card issuers are instituting annual fees they are willing to refund if you make enough purchases in a year. The first issuer to start doing this is Citibank and recently sent notices out to cardholders about the $60 fee starting April 1st. If cardholders spend $2400 in a twelve month period, the fee will be waived. Consumerist has the full text of the letter cardholders received.

I received an email from a reader asking if I knew what she could do: “I am not sure if you have covered this topic but I got a letter in the mail from Citi cards that they are going to now charge $60 annual fee and that fees is apparently going to be waived at the end of the year if I make a tleast $2400 in a year in purchases. I have had this card for a couple years and used it once to do a balance transfer for 0%. I have a limit of $17,300.00 on this card. I am at a loss on what to do because I may not be able to make the $2400 in purchases because I use my high interest debit card for most of my purchases. My question is – if I were to close this account, how is that going to affect my credit? Will it? What are the factors I should consider before I close the account?”

If you think Citibank is alone in this, think again. Issuers are seeing many of their former revenue streams trimmed by the Credit CARD Act and they’re trying to find alternatives. I personally prefer something straightforward like this than something a little harder to understand plus it doesn’t appear everyone is receiving a similar notice, perhaps it’s just the low activity cards? Either way, we have a workaround. 🙂

If you close this account, it will lower your credit score a little bit since your credit utilization will go up but it’s better to do that than pay $60 unnecessarily. If you want to avoid closing it, here’s an alternative…

Buy Presidential Coins from U.S. Mint

I do have a better, albeit short term, solution – buy coins from the U.S. Mint. The US Mint has a $1 Coin Direct Ship Program where you can buy up to two boxes ($500 total) per each Presidential coin issue, with no limit on Native American designs. At the moment, there are enough coins on the site to satisfy the $2400 annual purchase requirement and shipping is free (when you add it to your cart, it will show $4.95 for shipping but that will drop to $0 at checkout)

You can buy these coins and deposit them at your bank. Minimum purchase requirement essentially avoided.

Personally, I’m all for more $1 coins entering circulation. A coin can survive twenty five years, according to the US Mint, and a paper bill survives less than two years. The more coins we have, the cheaper our currency will be and we all win.

{ 74 comments, please add your thoughts now! }

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74 Responses to “How to Avoid Credit Card Minimum Annual Purchases Fees”

  1. I am a Citi cardholder but I don’t remember receiving anything in the mail about this. I currently spend over the $2400 a year minimum on the card and it is paid in full each month. They are not making any money in interest so I’m surprised I haven’t received anything like that.

    • Jim says:

      I never received a letter either and I think it’s because I spent over $2400. There’s no sense telling someone who already exceeds the requirement I guess.

      • ziglet19 says:

        I am a Citi holder too, and was wondering why I didn’t receive the letter, but I also exceed the $2,400 in annual spending.

        • Jat says:

          Why are you wondering? You answered your own question.
          They only send the letter to those who have been spending less than $2400 per year on their card.

          I spend about $1500 or less per year on the Citicard and I got the letter, so I’m canceling.
          I have an Amex card that gives cash rewards on purchases so I that card everywhere I can and the Citicard only at places that don’t accept American Express. So I don’t want to increase spending on the CitiCard because that will reduce my cash rebate.
          I will get a new no annual fee Visa or Masterard from a credit union and get rid of CitiCard.

  2. For some people is not a choice, is the only credit card they have. I have seen $ 60.00 on a 500 credit card that is 12%,on top of the 18% to 32% they are charging you.

    So 30% to 46% that should be banned from the market….

    The person that is doing this obviously don’t have the knowledge to calculate cost of money .
    We have the responsibility to help them.

    • Jat says:

      If it is the only credit card they have, then it is easy to spend $200 per month.

      I spend less than $200 on my Citicard because it is not competitive with my Amex cash rewards. The Citicard is a last resort card when I go to places that don’t take Amex. I also have a recurring monthly bill from a place that doesn’t accept Amex. However, the total of those purchases still amounts to less than $200 per month.

  3. one awesome way to avoid credit card annual fees is to not use credit cards! these companies are thieves. “Gaming them” doesn’t exist. Nobody ever got rich off of accumulated airline miles.

    • Perhaps not, but my wife and I bank quite a bit of money in the cash rewards every year. We need to buy diapers anyway. We can pay with a check and get no cash back, or pay with credit card and get cash back.

      The key is that you only use the card to purchase items that you would otherwise purchase, rather than using it to enable other purchases. In our case, we pretty much need the diapers.

    • Soccer9040 says:

      True – No one ever got rich, but I have 250,000 Marriott points because of my business travels. I might not be a millionaire, but I can vacation like one for a few weeks! All because of my credit card.

  4. Asa says:

    Is this fee per card/account, or per card holder? For example, I have several Citi cards, do I need to spend $2400 on each one or just $2400 on any one of them?

  5. jsbrendog says:

    that kind of sucks that they can just go, “hey, we know you’ve had this no fee card for multiple of years but we’re now imposing a fee on you if you don’t meet our criteria. that contract you signed when you signed up? we changed it. boom”

    I mean even evil companies like verizon keep old phased out plans if you keep renewing. i was grandfathered in to a $35 a month calling plan for 3-4 years after it had been dioscontinued because i had just kept renewing my service and had been grandfathered in

    • Soccer9040 says:

      Funny you say that. My mom pays $19.99 a month for 200 minutes on her cell phone plan. Its because her plan was from 1992 and they have never forced her to change.

      Me on the other hand….I had an old Bank One legacy account and just this year Chase “upgraded” me “for my convenience” out of the old account. Now all the sudden I would have to pay fees if I don’t follow the rules.

  6. gnatl says:

    I received the letter from Citibank. I had their card for over 20 years. I went for the “opt out” option and closed the account. I say, “hit me with the $60 fee at year end if I don’t make $2400 in charges. I ain’t paying $60 upfront to hold a MasterCard card.”

  7. BrianC says:

    So far so good–no letters for my 3 Citi cards. I don’t rack up $2400 in annual spending on these cards, so I suppose I’ll get hit soon or in the next round. Right now I’m glad I have multiple cards over multiple issuers. Let’s just hope they ALL don’t follow Citi’s lead.

  8. Mcneri says:

    The Policy of the US Mint about this 1$ coin Direct Ship program states that depositing it in a bank violates the terms and conditions of the sale. I still think this is a neat idea to pick up credit card rewards. It is almost like a cash advance.

  9. Kathy says:

    Just got a notice from Bank of America that they are changing the terms. $60 annual fee. I’m never late. I always pay more than the minimum. Why are they allowed to amend the agreement for no reason?

    End result? I’ll pay the $60 fee this year. Pay it off sooner. I’ll take my business elsewhere where I’m a valued customer.

    Bank of America does not have any perks. No rewards. No reason to stay. I hope they, and all companies who do this, get bad reputations and end up dealing with people who must use them because good companies wont accept them. In the end, they will fight for their payments from the not so good credit card holders and loose their good credit card holders.

    See ya B of A!

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