Guarantee Annual Fee

The annual guarantee fee refers to the fee charged annually by a bank or guarantee institution to the applicant for issuing and maintaining a guarantee (such as a performance guarantee, advance payment guarantee, bid guarantee, etc.). Usage scenarios include: in long-term projects (such as engineering contracting, equipment export), where the guarantee validity period exceeds one year, the bank will charge the fee annually; or the applicant chooses to pay annually to spread the cost. Notes: The annual fee is usually calculated as a certain percentage of the guarantee amount (e.g., 0.5%-2%), depending on the guarantee type, term, applicant's credit, and bank policy; if the guarantee is cancelled early or expires, the annual fee may be refunded based on actual days or not refunded; the annual fee is different from the issuance fee (one-time), which is charged at issuance, while the annual fee is charged annually thereafter; it should also be distinguished from guarantee amendment fees and extension fees. In addition, the annual fee may be subject to a minimum charge standard, and different banks have different billing methods. Foreign trade practitioners should clarify the fee structure before applying to avoid hidden costs.