A Potentially Disastrous Reminder of Why You Need to Check Annual Fee Credits on Closed Accounts!

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Annual Fee Credit on Closed Accounts

It’s a tale as old as time. You open a rewards credit card and use it a bit, but don’t get a lot of value out of it. At the end of the year the annual fee comes due and you decide to cancel before the payment due date. You then call the bank and are told the account is closed. Easy, right?

Well, not exactly. Believe it or not that annual fee is still a charge on the account and if it isn’t either paid or credited back, you can be charged late fees. If the problem persists long enough, it could show as a 30 day or more late payment on your credit as well. Are you at fault in such a situation? Probably not, but it is easier to avoid that problem than trying to fix it.

A Bank of America Blunder

Annual Fee Credit on Closed Accounts


My wife recently had such a thing happen to her when she called Bank of America and cancelled her Alaska business credit card. The rep said they would remove the annual fee and that nothing else needed to be done. She went on with her life until yesterday when she opened a piece of mail saying the account was almost 3 months past due!

I manage our credit card accounts online and almost always go in to make sure the annual fees have been credited back. Some banks take up to 30 days to credit back the fee, so I generally check around the statement due date and just pay the annual fee if it is still due. This results in a credit balance in the end and a check being mailed back to us, which I am fine with. This sytem has worked for many many years, but not this time!

My Failed System

So what happened in this situation? Unlike other banks who leave your credit card tied to your online profile when closing an account, Bank of America removes it altogether for closed accounts. (At least in my experience.) This means that I didn’t see the account when logging in and forgot to follow up on the annual fee. I have never actually had a time when the annual fee wasn’t credited back, but of course it would happen in the one situation where I wasn’t prompted to follow up.

Anyway, fast forward to yesterday where we received a bill for ~$151. This included the annual fee, a couple of late fees and interest charges on the annual fee and late fees. Thankfully my wife and I are Platinum Honors members with BofA which seems to get us a higher level of service. A quick call to an agent resulted in an apology and an assurance that all of the fees and late charges will be erased. We have already notated it on our calendars to follow up in a couple of days.

Your Credit Report

Annual Fee Credit on Closed Accounts

One of the most damaging things to a credit score can be late payments. In this case it was a business account which doesn’t show on my wife’s credit so nothing has been reported and thus nothing needs to be fixed. If it had gone to collections, then it most likely would have shown on her report.

If this situation were to occur with a personal credit card account, once the account is 30 days past due it will be reported to the credit bureaus. A single 30 day late can drop your score by 50-80 points depending on other factors. If a late is reported, the first thing you need to do is get the account fixed, then get a letter from the bank stating the account was never late. You can use that letter to dispute the reporting. You can also ask the bank to reverse their reporting as well.

Best Practices

Annual Fee Credit on Closed Accounts

When closing a credit card account there are a couple of things you can do to avoid late payment fees and dings on your credit report:

  • Always confirm when the annual fee will be credited when closing an account.
  • Add an “Annual Fee Credited” or “Confirmed Zero Balance” column to your tracking spreadsheet to ensure that your closed accounts are at a $0 balance. Check back within the timeframe you are told, to ensure the rep credited back the annual fee.
  • If the annual fee becomes due and has not yet been credited, consider paying it, knowing you will get a check back. This is a personal preference since I’d rather do this than fight to get the fees fixed later.
  • If a mistake has been made and your credit is affected, work with the bank to reverse the mistake, then push them to reverse the credit reporting. It is always a good idea to get a letter stating the account was not late, so you can dispute the reporting as well.


My previous system of manually checking closed accounts had worked for many years, but Bank of America’s practice of removing a closed account from online access threw a wrench into that. For now I have updated my tracking spreadsheet and will be a bit more diligent in making sure everything is closed out for good.

Have you had a similar problem with a bank? How was it resolved? Do you have any tips to share with others? Let us know in the comments!

Shawn Coomer
Shawn Coomerhttps://milestomemories.com/
Shawn Coomer earns and burns millions of miles/points per year circling the globe with his family. An expert at accumulating travel rewards, he founded Miles to Memories to help others achieve their travel goals for pennies on the dollar. Shawn also runs a million dollar reselling business, knows Vegas better than most and loves to spend his time at the 12 Disney parks across the world.

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  1. I also manage my wife’s and my accounts. Here is a system that has worked great for me: Log into all accounts once a week. Also, pay off annual fee right away, and have them mail you a check later for the credit.

  2. Shawn, something similar just happened to me. The annual fee hit on a Barclay’s card. I called to close and I was told I had 60 days to pay. I decided after 30 days to close the account anyway (and I did pay the annual fee before closing). I got a credit alert three days ago that my credit score had dropped 80 points. Barclay’s reported the account as closed, with $0 owing, but a delinquent payment! I now have to write them to try to get it removed. Would have been far better just to pay the annual fee at the time it was due and decide later (within 60 days) as you suggested.

  3. Comenity(Virgin) took three calls over 60 days to get properly closed and late fees removed. Mint.com helped pick it up. Luckily, no adverse credit reports. Just lame.

  4. I had the same thing happen to me with a credit card I cancelled and forgot about. I also received the letter in the mail after it was 3 months over due. After calling I got all of the fees reversed but it took a told on my credit score. Since then started using an app called Prosper Daily that allows me to manage and Track balances on all of my cards to include the cancelled cards. If a late fee pops up again the app will catch it and I can handle it before the forgotten account 90 days late.


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