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How to Avoid Credit Card Minimum Annual Purchases Fees
Posted By Jim On 02/12/2010 @ 5:21 pm In Credit | 74 Comments
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…
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.
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 Email: mailto:?subject=http://www.bargaineering.com/articles/how-to-avoid-credit-card-minimum-annual-purchases-fees.html
 instituting annual fees: http://www.bargaineering.com/articles/credit-cards-requiring-minimum-annual-purchases.html
 full text of the letter: http://consumerist.com/2010/02/jesse-we-knew-banks-were.html
 credit utilization: http://www.bargaineering.com/articles/credit-utilization.html
 $1 Coin Direct Ship Program: http://www.usmint.gov/mint_programs/$1coin/?action=directShip
 according to the US Mint: http://www.usmint.gov/faqs/circulating_coins/index.cfm#anchor6
Thank you for reading!