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Legal, Regulatory, and Privacy Issues

Can your card company impose a new annual fee on you?


Card issuers can make changes to their products, such as start charging fees on otherwise no-fee cards. These are your options when hit with a new fee on your credit card.

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You deliberately chose a credit card with no annual fee, but you check your monthly statement and suddenly there’s a $39 annual fee, defiantly staring you down.

Did you misunderstand your contract or is your card issuer trying to pull a fast one by abruptly charging you an annual fee? And is this even legal?

Yes, your card issuer can do that. And yes, it is legal. But you have rights as a cardholder, and options if you don’t want to assume that fee.

Card issuers can start charging fees, but must give you notice

According to the Credit CARD Act of 2009, it is legal for a credit card company to make changes to a product. However, the law also states that the card issuer must provide notification prior to making that change or adding a fee.

“Generally, credit card companies must provide at least 45 days’ notice before changing fee structures, interest rates or any other material changes to your credit card terms,” Roger Ma, a certified financial planner, said. “Once a cardholder receives a notice, they have a right to cancel the card before any increased fees take effect.”

If you see a new fee, examine the card’s benefit list for changes, because it may occur if the credit card company is revamping the entire product.

“But it would be unusual to change a no-fee card to one with a fee,” Mary Jane Rogers, managing director and head of communications for card and merchant services for JPMorgan Chase, said. “It’s more typical to tweak benefits within no fee and fee categories.”

Ma said he hasn’t had a client who encountered a “no fee to fee” experience, but he has talked to clients who saw a fee increase.

“Examples include the American Express Starwood Card, from $65 to $95 in 2015, and the American Express Platinum Card, from $450 to $550 in 2017,” he recalled.

His clients evaluated whether the card was worth the fee increase and tried to get the card company to waive or discount the annual fee if they found value in the increase, he added.

“If that didn’t work and they didn’t feel like the card was worth it anymore, they either canceled the card or tried to downgrade to a no-fee card with the same card company,” Ma added.

Why is your credit card company charging you a fee?

If you purposely signed up for a credit card with no annual fee in the first place, why would a credit card company suddenly do an about-face? Before you lay into your credit card company, check your contract.

“It also may be the case that the terms and conditions actually have not changed,” Parker Daniels, personal finance consultant with The General Auto Insurance, said. “Some credit cards waive the annual fee for the first year, making it free” for the first 12 or so billing cycles.

“Something else to consider is that the charge you received may not have been due to an annual fee at all,” Daniels added. What you thought was a fee may be accrued interest on the card’s balance, for instance.

In the case in which the new fee accompanies new card benefits, the credit card issuer may be positioning your card to be more attractive in a highly competitive market.

“I think card companies are also well aware of their competition and keeping an eye on what benefits other cards are offering,” Ma said. “When the Chase Sapphire Reserve was introduced, a lot of people signed up for that card. Potentially in response to the types of benefits that card was offering, American Express updated its benefits and increased its annual fee as a result.”

What to do if you encounter a new annual fee on your card

Most experts recommend trying to have the fee reduced or waived by your card issuer.

“Call the card company and ask them to waive the fee,” Bill Fay, personal finance blogger from, advised. “Companies don’t want to lose your business, especially if you make on-time payments, so they should find a way to accommodate you.”

A 2017 survey actually found that 82 percent of those who asked their card issuer to waive or reduce their annual fee succeeded.

If the company refuses to waive the annual fee, consider canceling the card and finding another one without an annual fee, Fay said.

“The warning that you may damage your credit score by canceling one credit card is, in our estimation, overrated,” he added. “It might be a valid concern if that’s the only credit card you own, but if you have multiple cards, as most consumers do, there is a negligible effect on your credit score for dropping one.”

Ma said that one of the factors to keep in mind when considering canceling a card is your total credit utilization, which makes up about 30 percent of your credit score. Credit utilization is the percentage of debt to your credit limit and is factored by credit scoring formulas across all your cards as well as each one individually.

If closing that card will make you lose a significant portion of your available credit and increase your credit utilization, you might want to secure a no-fee card with a similar credit limit first.

Another reason to think twice before canceling that fee card is if it’s your oldest card and removing it from your credit profile will shorten significantly your length of credit history – which accounts for 15 percent of your score.

“The average age of your accounts is one factor and often what people worry about when they are deciding whether to cancel an account,” Fay said. “If it’s a fairly new account, perhaps there will be little effect.”

See related: 6 credit card fees you might not know about, Best no-annual-fee cards, A credit card checkup includes reviewing annual fees

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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