If you’re new to points and miles, you might be wondering what to do with your credit card after earning the welcome bonus. Should you keep it, downgrade it, or cancel it? The decision can have a significant impact on your travel goals and finances. Here’s a simple guide to help you choose the best option for your situation.

Important Note on Points Before Closing a Credit Card

Before making any decision about keeping or canceling your card, make sure you know how to transfer or combine your points with another account that you’ll keep open. This will help prevent losing any of your hard-earned rewards.

Tip: Always confirm with your credit card issuer that your points can be transferred to another account if you decide to close the card. A representative can walk you through the process to ensure you don’t lose any value.

Action Steps Before Cancelling a Card

Before rushing to cancel your card, there are a few key steps to take that can help maximize the value of the card and prevent any negative effects on your credit score.

1. Check for a Retention Offer

Banks often provide retention offers to encourage you to keep the card. These offers might include:

• A points bonus for meeting a spending requirement within a specific timeframe (similar to the welcome bonus).
• Waiving or reducing the annual fee.

How to Request a Retention Offer:

• American Express: Use the secure chat feature in your online account.
• Other Banks: Send a secure message through your online banking platform or call customer service directly.

Pro Tip: Retention offers aren’t guaranteed, but it’s always worth asking. A quick call or message might save you money or earn you additional rewards.

Sample Script for Calling:

Hi, my name is [Your Name], and I’ve really enjoyed using [Card Name] for [specific benefits you enjoy, such as earning rewards, travel perks, etc.].

Reason for Call:
I’m currently reviewing my budget and the card’s annual fee, and I’m considering closing my account.

If They Need Clarification:
I’d love to continue using this card, but I’m weighing its value against other options. A retention offer could really help me make that decision.

Closing:
Thank you for your help—I appreciate your time!

When to Keep an Annual Fee Card

In some cases, keeping an annual fee card may still be worth it if you find ongoing value in its benefits. Here’s why:

1. Annual Free Night Certificate

Many hotel credit cards offer a free night each year, which can often be worth more than the card’s annual fee.

2. Access to Transfer Partners

Certain cards allow you to transfer points to airlines or hotel partners, providing premium travel opportunities.

3. Airport Lounge Access

Premium cards often come with airport lounge access, enhancing your travel experience with complimentary food, drinks, and comfort.

4. Travel Insurance and Coverage

Perks like rental car insurance, lost luggage protection, and trip cancellation coverage can save you money and provide peace of mind.

Pro Tip: If the card isn’t your oldest line of credit, keeping it can help maintain your credit score by preserving your credit history.

When to Downgrade a Card

If you no longer find value in the card’s annual fee but want to keep the credit line open, consider downgrading to a no-annual-fee version of the card.

Benefits of Downgrading:

• Retain Your Credit History: Downgrading keeps your account open, preserving your credit history and improving your credit score.
• Stay Eligible for Future Bonuses: Some issuers allow you to earn a welcome bonus again after a waiting period, even if you downgrade your card.

Example: If you don’t use premium benefits like lounge access or transfer partners, a downgraded version of the card can still be a useful tool for everyday spending.

When to Cancel a Card

Closing a card should be a last resort, but there are situations where cancellation makes sense. Here are two key scenarios:

1. The Card Has No Continued Value

If you no longer find value in the card and there’s no downgraded version available, canceling may be the best choice.

2. To Earn a Welcome Bonus Again

Some cards, such as Southwest credit cards, require you to close your existing card before reapplying to earn another welcome bonus.

Pro Tip: Many cards allow you to earn the welcome bonus repeatedly after a certain waiting period. The clock for earning the bonus starts from when you last earned it, not when you first opened the card.

Examples of Popular Cards with Bonus Waiting Periods:

• Every 48 months: Chase Sapphire Preferred, Chase Sapphire Reserve, Capital One Venture Rewards, Capital One Venture X.
• Every 24 months: Chase Ink Unlimited, Hyatt Personal Credit Card, Southwest Business and Personal Cards.

Important: Before canceling, ensure you’ve redeemed all your points or transferred them to another account. Points may be forfeited once the account is closed.

Final Tips for Managing Your Credit Card

1. Keep Track of Annual Fees

Set reminders so you can evaluate whether a card is still worth keeping before the annual fee posts. A tool like Travel Freely can help you track fees and send you timely reminders.

2. Evaluate the Card Annually

Every year, ask yourself if you’ve used the card’s benefits enough to justify the fee. If not, consider downgrading or canceling it.

3. Be Strategic with Retention Offers, Downgrades, and Cancellations

Make sure your decisions align with your long-term points and miles goals. Managing credit cards thoughtfully can maximize the value you get from each one.

By following these steps, you can ensure you’re making the best decision for your finances and travel rewards. Whether you keep, downgrade, or cancel a credit card, the goal is to maximize the benefits while minimizing unnecessary costs.