When to cancel a card and when to pay an annual fee 2


Last April I did a churn for both my mom and my fiance, now husband, better known as “The Villain” on this blog. I got them each a Chase Sapphire and a US Bank Club Carlson card, and my mom the US Airways Mastercard through Barclays. Huge shoutout to my mom, who I don’t think had a clue what was going on, but gave me her social security number to sign her up for not one but three different cards. She graciously let us use her points for a weekend getaway to NYC in December and we’ve put some towards our flights and hotels for Europe this fall.

It’s been a year and all five of the cards were almost up for the annual fees to hit. I planned to cancel two out of three of my mom’s cards. I was living at home last April so it was much easier to manage my mom’s cards then, and my dad is starting to churn for their cards more independently now anyway (go Dad!).

I planned to keep the Club Carlson card open for both since it offers a 40,000 point anniversary bonus, well worth the $75 annual fee in my mind. But I knew that we’d have to make some phone calls to deal with the other three cards.

happiness

Here’s how our calls last night played out:

1. I called the Chase Sapphire line to cancel mom’s card. One of my favorite things about the Sapphire is that a human being picks up right away! It only took me a few minutes to transfer her remaining Ultimate Rewards points to my dad’s account and cancel her card.

2. I told The Villain how easy it was, and told him to hop on the phone to call and cancel his.  He called to cancel and even got the credit line transferred to his open Southwest Visa.

3. Immediately after he hung up, I realized the error of my ways. There is a no-fee version of the Chase Sapphire, which I should have downgraded both cards to rather than canceling them. Closing a card could potentially lower your average age of account, so when possible, it’s best to try to switch to a no-annual fee version of the same card or a different product with the same bank.

4. On the verge of tears, I beg Caleb to call Chase back. He offers to open a bottle of wine instead, and I insist that him just calling back to ask would make me feel better. Calling banks is his least favorite part of all this (since it’s truly the only thing he has to do himself). Luckily for us, the Chase rep had no problem downgrading the card to the no-annual fee version (without another credit check), and transferring the credit back from the Southwest card he had transferred no less than 10 minutes ago. Both of the reps he spoke to profusely thanked him for being a loyal Chase customer and having several open accounts. Proof enough to me that having multiple cards with a bank can actually be viewed positively, not negatively.

Lesson learned—even once you’ve been in the “miles and points game” for awhile, it’s easy to make silly mistakes. Think through your strategy before making any calls, and if you do something you didn’t mean to do, it never hurts to call back and beg!

5. Feeling better about myself after The Villain successfully recovered from my error. One card to go. I called Barclaycard to cancel mom’s US Airways Mastercard. Right away the rep on the phone starts offering options for me to keep the card, which I know is a good sign. He tells me that the version of the card I have includes a 10,000 point annual bonus, which has already posted to the account, therefore if I cancel the card I would forfeit the chance to earn those points next year. While on the phone I quickly log in to mom’s account and realized they had indeed already posted! He ran through the benefits, such as a free checked bag, priority boarding, a lounge pass, and a $99 companion certificate. He offered to cut the annual fee in half, from $89 to $44.50. Had it been my card I would have jumped on the offer, but I knew my parents tend to only fly Southwest because they have the companion pass, so I went ahead and canceled the card to avoid the annual fee all together. 10,000 free points is plenty for me, err, my mom.

6. Realize that I should have called Barclaycard two months ago when my annual fee for the same US Airways card was due. Potentially could have saved myself $44.50! At least now I know for next year that the 10,000 points post a few weeks before the annual fee is due.

Second lesson learned: before deciding to keep or cancel a card, I highly recommend calling the bank to determine whether or not they can offer you any sort of retention bonus. The Points Traveler wrote a good post on Mastering the Art of the Retention Call. We have had mixed luck in the past with retention phone calls. Our most successful has been with Citi bank for our AAdvantage cards. We called to ask about cancelling the cards because we didn’t want to pay annual fees, and Citi offered to give us statement credits, for more than enough to cover the annual fee, plus offered a bonus of 1,000 points for each month we spent at least $1,000 on the card in the next 16 months.

Overall, I experienced several points highs, and lows, last night.  In the end it took less than an hour of our time to avoid $279 in annual fees, minimize damage to their credit scores and end up with 10,000 free miles.


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2 thoughts on “When to cancel a card and when to pay an annual fee

  • TD

    Would it be better to cancel a card instead of reallocate the LOC to a non fee card? Keeping that particular non fee version of that card avail for sign up bonus instead. Please advice. Thanks.

    • btegtmeier

      TD, in most cases I think it is better to downgrade and transfer your line of credit to a no annual fee version to minimize potential negative impacts on your credit score. Certainly there are cases where you could cancel the card so that you become eligible for the sign up bonus again. Most banks are getting stricter about allowing customers to truly “churn” cards though, i.e. repeatedly sign up for same card over and over again for the bonus. Amex has a new rule effective today that you are only allowed one bonus per card per lifetime. Other banks require you to wait 12-24 months after cancelling a card before you can reapply and receive a bonus. I am still fairly new to the points game (18 months) so there are still plenty of good offers out there for me to take advantage of that I don’t worry too much about being able to get repeat offers yet.