Although paying annual fees on credit cards is worth the benefits in most cases, you might consider canceling a card if you don’t receive enough value or want to make room for other cards in your wallet.
However, before canceling a card for good, consider making a retention call. You might receive an offer you can’t refuse to keep your card open for another year, and sometimes it’s OK to make these calls proactively, even if you don’t actually want to close the card.
If no offer is available at the time of your call, you might consider closing the account. In these cases, I recommend making certain preparations before dialing a retention line.
Do Not Make a Call Late in the Day
You get busy and forget to call the credit card issuer, but I do not recommend waiting forever and a day. Once that annual fee hits, or even right before, make the call. Do not wait until payment is due because as time ticks, you might compromise your plan B possibilities when no retention offer is presented and you will lose your points. Give yourself enough time to make the following preparations before closing the card.
Tip: This strategy does not apply to co-branded cards because your points will stay in that airline’s or that hotel’s account after the card’s cancelation.
Open Another Card That Earns the Same Points
Typically, bank credit cards issued by the same institution earn the same points, which can be pooled. Such is the case with American Express Membership Rewards-earning cards, Chase Ultimate Rewards-earning cards and Citi ThankYou Points-earning cards. You can combine rewards in one account and redeem miles as you see fit.
Having multiple cards in the same family helps to keep your points from expiring. For example, you have The Platinum Card from American Express and are considering canceling it because of the high annual fee ($550). If you cancel your card, your points will vanish. Make sure to hold another Membership Rewards-earning card that will keep your points alive, such as the no-fee Amex EveryDay Card or the Premier Rewards Gold Card with a lower annual fee ($195).
Think of Where You Want to Transfer the Points
Speculative point transfers usually aren’t your best plan because of devaluation risks, especially in the case of transferable points, which are highly valued. However, if you cancel your card and your points will disappear, decide which program you might want to transfer your points to before they expire. Ask yourself where you want to travel, which airline program you are more likely to use and where the miles would be safe. It’s also important to note each program’s mileage expiration policies before making that transfer.
If Possible, Transfer Points to a Spouse
This option isn’t possible for all rewards programs, but you might be able to transfer points to another person to keep them safe. Chase lets two members who either live in the same household or are authorized users on each other’s credit cards transfer points between accounts at no cost.
Citi lets you transfer ThankYou Points to any member, but the points expire 90 days after the transfer is made, and the points are alive only temporarily. You still will have to find a way to redeem them before then. Unfortunately, the option to transfer Membership Rewards points to another person is not available to those with American Express cards.
Convert Your Points to Cashback
This redemption option is the absolute last resort! If you’re not interested in opening more credit cards or transferring to a specific travel partner and risk mileage devaluation, you can redeem your points for cashback. In many cases, doing so won’t present the best value for your points, but it’s better than getting nothing after closing your card. This option works best when the points balance in your account isn’t significant enough to make a travel redemption.
What preparations do you make before calling a retention line and possibly closing a credit card that earns flexible points?
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