Annual fees do not count towards a credit card’s minimum spending requirement for bonus rewards. Paying other fees, such as those for balance transfers and cash advances, doesn’t count toward a card’s minimum spend, either.
Many credit cards have sign-up bonuses for new cardholders who spend a certain amount on purchases during a specified timeframe. For example, you might get $500 for spending $3,000 in your first 3 months. But that minimum spend is for purchases, and paying your card’s annual fee doesn’t count. Credit cards’ terms and conditions are very specific about this. They leave little room for interpretation.
Paying a credit card’s annual fee does count toward another type of minimum spending requirement, though. Sometimes, credit card companies will close your account if you don’t make a purchase or bill payment for a long period of time. If a card has an annual fee, it is automatically billed to your account once every 12 months. In general, issuers will keep your account active as long as you pay the annual fee.
Transactions that don’t count toward minimum spending requirements:
- Fee and interest payments
- Balance transfers
- Cash advances
- Checks that access your account
- Purchases or reloading of prepaid cards
- Purchases of cash equivalents (traveler’s checks, foreign currency, lottery tickets, money orders)
- Returned purchases
To avoid losing out on a sign-up bonus, make sure you know what does and does not count toward your card’s spending requirements. Annual fees definitely do not.