Do annual credit card fees count towards sign-up bonus requirements?

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In a perfect world, these large fees would be useful.


Key points

  • Annual fees are not considered purchases, so they do not count towards the sign-up bonus spending requirements.
  • Other transactions unrelated to the purchase are also excluded. This means balance transfers and cash advances will not count.
  • Spending requirements take your net spend into account, so any returns that reduce your net spend will count towards your bonus requirements.

Every credit card lover has a soft spot in their heart for a good sign-up bonus. Whether you prefer cash back cards or travel rewards, this sign-up bonus is full of delicious possibilities.

I used a single hotel credit card sign-up bonus to cover my accommodation for an entire week on a family vacation. An airplane card bonus took us to the UK — in Company to classify.

But as wonderful as sign-up bonuses are, they all have one major downside: the spending requirement. The vast majority of credit card sign-up bonuses will require you to spend a set amount of money over a period of time to earn the bonus. For example, a bonus might give you $150 cash back if you spend $500 on your new card in the first three months.

The larger the bonus, the greater the need for spending. And the best bonuses tend to come from premium cards with very high fees. It is therefore natural to hope that you will be able to use these fees additionally by reducing your spending needs. Unfortunately, it doesn’t work that way.

Annual fees are not “purchases”

In summary, the spending requirements only consider net purchases. Since your annual membership fee is not a “purchase”, it is a costs – this will not count towards your sign up bonus terms.

Considering the size of some of the annual fees, this is a major disappointment. Some fees could easily add up to 10% or more of the spending requirement if they mattered. But they don’t.

These transactions will also not count

The purchases only rule also excludes a variety of other account transactions for your bonus requirements. Balance transfers, for example, will not count. Nor the balance transfer fees that often come with them.

For example, let’s say you get a card with a 0% introductory APR on balance transfers. It also has a $200 sign-up bonus for spending $1,000. No matter how much money you transfer to the new card, it will not earn you the bonus. Only new purchases made with this card will count towards the spending requirement.

Similarly, cash advances – and their associated fees – are also excluded from bonus requirements. This applies when you use your card to withdraw cash from an ATM, as well as for certain cash equivalent transactions. For example, if you buy crypto with your credit card, it will likely be coded as a cash advance, so it won’t count towards a sign-up bonus.

Don’t forget to consider feedback

When you look at the fine print of the sign-up bonus, you will notice that it refers to report shopping, no raw purchases. This is an essential distinction.

Basically, this means that any returns that result in a refund to your credit card will void the purchase. Suppose you make a purchase of $500 which is then refunded. The refund means that $500 no longer counts towards your sign-up bonus requirement.

And don’t think you’re out of the woods if the comeback happens after you win the bonus. Credit card issuers are known to claw back bonuses if you have returns that force you to spend, even months later.

Keep track of purchases – and Nope-purchases

An important part of getting a sign-up bonus is tracking your spending to make sure you don’t miss the deadline.

While some issuers offer designated spending requirement trackers – a little progress bar that tells you how much more you need to spend to earn your bonus – others leave it up to you to find out.

While there isn’t a dedicated progress bar for your sign-up bonus, you rely on the regular spend tracking offered by most issuers. This shows the total of all your card transactions for a given period. However, he understands everything transactions – not just purchases.

This means you’ll need to remember to subtract all non-purchase transactions, like annual fees, from your calculations. You will also want to do the same with any returned purchases that have been refunded to your card. Forgetting these steps can mean you think you’re closer to meeting the requirements than you actually are, which can mean you’re missing out on a lucrative bonus if you don’t spend enough time.

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