I was going through my filing cabinet and noticed that US Bank has been lowering my interest rate every couple of months. I thought this was pretty cool until I got to the end of the file folder and noticed on the Thank You letter that they originally sent me that there's a $40.00 Annual Fee with the card. I don't pay Annual Fee's on any of my other cards. Somehow this one slipped by me. I still have 3 months before my first year with them is up. Is the Annual Fee something that can be negotiated away? If not, will I take a hit by closing this card and getting another card from a competitor? I've never been late on my payments and I have no derogatories on my credit file. For years I lived off the grid and never had a credit card. This changed about a year and a half ago when I found this board. I now have 4 credit cards and am beginning to build my history. Perhaps my lack of credit history has US Bank spooked by me and this is why they are wanting an Annual Fee? What is my best approach with US Bank? Is there a best approach with the current credit crunch?
Closing it and opening another card will definitely hurt your score, since you will shorten your history. Opening a new card will shorten it even more. If you carry a balance and they've been lowering your interest rate, you may have saved the $40 already. I don't know anything about US Bank, so I don't know if they'll waive the fee or not. But in the grand scheme of things, $40 is not an excessive fee, especially if it's helping build your score. Does the card have any rewards? You have to look at those as well. Most reward cards have an annual fee. I pay $85 on one of my airline cards, but that's a cheap price to keep my miles from expiring, in my mind. If I only used that one card, I could probably run enough through the card in a year or two to get a free ticket, and even at $170 (two years fees) the ticket would be cheap. So look at the whole picture before you make a decision.
