Keep, Downgrade, or Cancel Credit Card?

One of the questions I get most often is what to do with cards after I’ve had them a year.

Important Notes

Never close a card until you’ve had it minimum 1 year. The 2 main reasons are that the bank “could” claw back your sign up bonus if you close before 1 year and closing early “could” annoy the bank and set yourself up for a bad relationship with them.

Timing

For most cards, once your annual fee posts, you need to cancel within 30 days to have this fee removed. It’s easier not to pay it right away – if you do and then you decide to cancel, they’ll need to refund you the fee.
For Capital One, once the fee posts, you will be responsible for the fee. This means you need to know the exact year date you opened card and cancel within a few days of that day BEFORE the annual fee posts.

4 Options

Retention offer – Ask credit card company for a retention offer
Keep – love the earnings or benefits on the card? Keep it!
Downgrade – Annual fee not worth the benefits? See if there’s a $0 annual fee card you can downgrade to.
Cancel – Holding too many cards? One no longer has good purpose? Benefits don’t outweigh fees? Cancel!

Retention Offers

Ask for a retention offer.
These are more likely on certain cards than others –

Chase co-branded cards
American Express membership earning points cards
I have not had any luck with Capital One cards or Chase cards that earn Chase points

In my experience, I am offered a retention offer about every 2 – 3 years on a card. I wouldn’t expect to get one every year.

Here’s how this works…

You see that your annual fee has posted. Within 30 days, call (or with Amex you can “chat”) and ask for a retention offer. Here’s the exact script I use:

“I see that the annual fee has posted on my credit card. I’m trying to decide if I should keep it. Can you see if there are any retention offers on my account”.

We’ve had luck getting the annual fee waived on airline cards in the past. And we’ve had luck with Amex offering us offers such as, spend $4K in 3 months and receive 35K points. These will vary and are targeted.

Cards I Keep Long Term

There are 2 types of cards I keep long term:
1. Cards that earn great multipliers where I spend most (grocery, dining, travel)
2. Cards that give great benefits and travel protections

Chase Sapphire Preferred® Card
Date opened: May 2022
Personal Card Plans: I plan to always keep this card. This card is a good earner for me in big spend categories (3x online grocery & 3x dining). PLUS it allows me to transfer my Chase points, which I get HUGE value from.

Capital One Venture X Rewards Credit Card
Date opened: May 2023
Personal Card Plans: I LOVE this card. The benefits are outstanding. The travel protections are great. And I earn 2x on every purchase. For me, the benefits on this card easily outweigh the fee.
In May 2027 when I am eligible for the welcome offer again, I may possibly close this card and then reopen for a new welcome offer.

The World of Hyatt Credit Card
Date opened: 2018
Personal Card Plans: I don’t plan to ever close this card. Every year (after year 1), you receive a category 1 – 4 free night certificate. I easily get $250 – $350 in value from that certificate. And the card fee is only $95. So for me, this is a keeper.

Ritz Carlton Credit Card
Date opened: February 2024
Card Welcome Offer Eligibility: This card is not available to apply for straight out. After holding the Marriott Bonvoy Boundless® Credit Card, you can “product change” to the Ritz Carlton card.
Personal Card Plans: This card has a $450 annual fee. But for me, the benefits easily outweigh the annual fee. Every year

American Express Platinum Card®
Date opened: January 2021
Card Welcome Offer Eligibility: Amex implemented “family” rules which affect the American Express® Green Card, American Express® Gold Card & the Platinum Card® from American Express.
Personal Card Plans: Even though this card has a very high annual fee ($895) See rates & fees – it is a forever keeper for me. I love the luxury benefits and the travel protections.

Cards I Plan to Cancel

Capital One Venture X Business
Date opened: February 2024
Why I’m choosing to close: This card generally has a very large minimum spend requirement to receive the welcome offer. It also generally has a very large welcome offer. I took advantage of this lower minimum spend requirement to receive the large sign up bonus. But because I have the Capital One Venture X Rewards Credit Card and many of the benefits on that card overlap with this card, I will close this card at 1 year mark.

Ink Business Cash® Credit Card
Date opened: April 2023
Why I’m choosing to close: This is actually one I’m on the fence about. I love this card for the Chase points earning potential. HUGE! And it has $0 annual fee. Which makes it a perfect “keeper” card. But I want to make sure I am able to continue getting Chase business cards in the future – so I don’t want to have too many. For that reason, I am considering canceling this card.

Hawaiian Airlines® World Elite Mastercard®
Date opened: November 2024
Why I’m choosing to close: When the merger with Alaska was announced, we wanted to take advantage of the current option to move points from Hawaiian to Alaska. This card had a welcome offer where you received the generous welcome offer after only 1 purchase. But I don’t foresee us using this card for any benefits and therefore, after 1 year I will close this card.

AAdvantage Aviator
Date opened: August 2024
Why I’m choosing to close: None of the 4 major banks allow you to transfer points to American Airlines. For this reason, it can be hard to earn AA miles. I opened this card specifically for AA miles. However, we do not fly AA more than maybe 1x a year, so I don’t think we’ll keep this card when the annual fee hits.

Downgrading Credit Cards

A very popular option is to downgrade your card rather than cancel it.
Here are some examples where we’ve done this:

Downgrade to: United Gateway℠ Card
If you have a personal United card with an annual fee, downgrading to this card is a great option.
Here’s why you would want this card: $0 annual fee. When you are searching for an award flight on United, if you have ANY of their cards (even this $0 annual fee one), you will often be shown further discounted United award flights.

Downgrade to Chase Freedom Flex®
If you want to downgrade one of your Chase Sapphire cards, this is my favorite option. This card can be a huge points earner. It earns 5x on up to $1,500 in combined purchases in bonus categories, which rotate each quarter (must activate). If you max out this earning opportunity, that is 30K Chase points you can earn on a $0 annual fee card.

Will I Lose Points if I Cancel a Card?

The GENERAL rule of thumb is… with BANK cards (like a card earning Chase points or a card earning Capital One miles), if you close that card, you’ll lose the points. So be sure to transfer them (or combine them to another card) before you close the account.
With cards that earn co-branded loyalty points (like Southwest, Marriott), even if you close the card, the points stay with the loyalty program.
It is always a good idea to confirm this when you are speaking to the card rep & closing an account.

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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.