Should I Keep, Downgrade, or Close My Credit Card?
Editorial Disclosure – Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post..
Are you looking to cancel a credit card but not sure if it’s the right move?
Before you make any decisions, it’s important to consider your options. In some cases, you may be able to keep the card and continue receiving valuable benefits.
Downgrading the card to a lower annual fee option could be a better choice in other situations. And if neither of those options works, canceling the card may be necessary.
In this post, we’ll discuss the Keep, Downgrade, Cancel action steps, and how to request a retention offer. Plus, we’ll explain what a retention offer is and why it’s worth requesting one.
So, read on to learn more!
What is a retention offer?
A retention offer is an incentive credit card companies offer to encourage you to keep your card. It can come in the form of a statement credit, bonus points, or even a waived annual fee.
American Express offers a secure chat feature that you can use to request a retention offer. Other banks provide a secure message (much like email) inside your account, but it’s usually faster to call. Not all credit card companies will award you a retention offer, but it is worth requesting one.
Keep the card if you find continued value.
If you’re still finding value in the card, it’s worth keeping it. Here are a few reasons why:
- Annual Free Night Certificate: If your card comes with an annual free night certificate, it may be worth keeping the card to take advantage of this benefit.
- Access to transfer partners: If your card provides access to transfer partners, it may be worth keeping the card to continue to earn and redeem points with those partners.
- Access to airport lounges: If your card provides access to airport lounges, it may be worth keeping the card if you travel frequently.
- Coverages: Some cards come with valuable coverages such as rental car collisions, lost luggage, and travel cancellations.
What is downgrading?
Downgrading a credit card means switching to a card with a lower or no annual fee. This can be a good option if you’re not finding continued value in your current card.
When should I downgrade?
You should consider downgrading your card if:
- The card does not have continued value or
- You want to be eligible for a welcome bonus again.
Often, you can receive a welcome bonus over and over again. Downgrading helps keep the amount you are spending on annual fees lower since you only pay annual fees for brand-new cards or cards you find continued value.
Two reasons you would close a card
- The card has no continued value, and you cannot downgrade to a $0 annual fee card.
- You cannot downgrade and must close the card to be eligible for the welcome bonus again. We do this with Southwest cards.
Important!
Never close your longest line of credit. Some cards allow you to receive the welcome bonus again after a set time. This time frame starts from the date you received the welcome bonus, not the date you were approved for the card.
In conclusion, before you cancel a credit card, consider your options. It may be worth keeping if you’re still finding value in the card. If not, downgrading may be a better option. And if neither of those options works, canceling the card may be necessary.
Remember to always request a retention offer before canceling a card, and never close your longest line of credit.
Opinions expressed here are the author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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