A young woman sits down to do online shopping, she pays with a credit card.

Does the credit card annual fee count towards the sign-up bonus requirement?

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In a perfect world, this hefty fee would come in handy.


key point

  • Annual fees are not considered purchases, so they do not count towards the sign-up bonus payout requirement.
  • Other non-purchase transactions are also not included. This means that balance transfers and cash advances will not be counted.
  • Spending requirements look at your net spending, so any return that reduces your net spending will count towards your bonus requirement.

Every credit card lover has a good sign-up bonus in mind. Whether you’re looking for a cash back card or a travel reward, this sign-up bonus is full of delicious possibilities.

I’ve used a hotel credit card sign-up bonus to pay for a full week’s stay on my family vacation.An airline card bonus brings us to the UK – in Business class.

But while sign-up bonuses are great, they all have one major downside: spending requirements. The vast majority of credit card sign-up bonuses require you to spend a certain amount within a given time period in order to earn the bonus. For example, if you spend $500 on a new card in the first three months, the bonus might give you $150 in cash back.

The bigger the bonus, the higher the spending requirements. The best bonuses tend to come from premium cards with very high fees. So it’s only natural to hope that you can use this additionally by reducing your spending requirements. Unfortunately, it doesn’t work that way.

The annual fee is not a “purchase”

All in all, spending requirements only look at net purchases.Because your annual fee is not a “purchase” – it is cost — It does not count towards your sign-up bonus requirement.

Considering the size of some of the annual fees, this is very disappointing. Some expenses can easily reach 10% or more of the spending requirement if you count them. But they didn’t.

These transactions are also not counted

The buy-only rule also excludes various other transactions from your bonus claim. For example, balance transfers will not be counted. Neither will the balance transfer fees they often come with.

For example, let’s say you get a card with a 0% introductory APR on a balance transfer. Plus a $200 sign-up bonus when you spend $1,000. It won’t earn you a bonus no matter how much money you transfer to the new card. Only new purchases made with the card will count towards the spending requirement.

Likewise, cash advances and their associated fees are excluded from the bonus requirement. This applies to cash withdrawals from ATMs and certain cash equivalent transactions when you use your card. For example, if you buy cryptocurrency with a credit card, it may be encoded as a cash advance, so it won’t count toward the sign-up bonus.

Don’t forget to consider returns

When looking at the sign-up bonus fine print, you’ll notice that it refers to network buy instead Total Buy. This is a crucial distinction.

Basically, this means that any return that results in a credit card chargeback will negate the purchase. Suppose you made a $500 purchase and later refunded it. A refund means the $500 will no longer count towards your sign-up bonus requirement.

If a return happens, don’t think you’re out of the woods back You earn bonuses. Credit card issuers have been known to claw back bonuses if your returns put you under spending requirements – even months later.

track purchases – and No-Buy

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

While some issuers offer a designated payout request tracker—a small progress bar that tells you how much you need to spend to get your bonus—others let you figure it out for yourself.

If your sign-up bonus doesn’t have a dedicated progress bar, you’re relying on the general spend tracker provided by most issuers. This shows the total number of all card transactions for a given time period.However, it includes all Transactions – not just purchases.

This means you need to remember to subtract any non-purchase transactions, such as annual fees, from the calculation. You’ll also want to do the same for any returned purchases that are returned to your card. Forgetting these steps can mean that you think you’re closer to meeting the requirements than you actually are, which can mean that if you don’t spend enough time in time, you could miss out on a big bonus.

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