Putting it All Together
What to Do With Cards After 1 Year
Many travel cards with annual fees are definitely worth the annual fee the first year, if you are eligible for the card's welcome offer. Some cards even waive the annual fee the first year.
This doesn't mean you should open every card, or that you need to keep every card you open. Make sure you understand how opening cards can impact your credit score and your 5/24 status.
Wait until you have had your card for a full year before doing anything. This helps you stay in the good graces of credit card companies and ensure they don't claw back your points. After a year, assess the ongoing value you anticipate getting from your card and decide whether you want to keep the card.
Ask for a retention offer
Before downgrading or canceling the card, you can call or message customer service to ask for a retention offer. Look for the number on the back of your credit card.
Sometimes credit card companies will offer you a retention offer to get you to keep your card. Retention offers typically come in the form of bonus points or statement credits.
It's always worth asking for a retention offer before deciding what to do with the card. The key is — you have to ask for it. Not sure what to say? You can find our retention offer tips below.
If you've decided that you don't want to keep paying the annual fee on your card, and you aren't satisfied with your retention offer, you have two options:
Downgrade the card
Many credit cards are grouped into "families" -- several related cards with varying annual fees. Depending on your specific card, there's a good chance that you'll have the option to downgrade your card to a lower fee or no-fee card.
When you downgrade a card, the new card will need to be in the same card family. For example, you can't downgrade a Delta SkyMiles card to a Marriott card, or a Chase Sapphire Preferred® Card to one of the United cards.
Keeping cards active — by either keeping or downgrading them — is an important part of keeping your credit score high. Closing credit cards could impact your length of credit history and your credit utilization, both of which could have a negative impact on your credit score.
Note that you generally won't be eligible for any welcome offers on the card you downgrade to. For us, this isn't a big deal since the welcome offers on no-fee cards aren't usually very generous. But you don't want to downgrade to a card with a high offer that you'd otherwise be eligible for.
If you downgrade a card, you may not be eligible for a full refund of the annual fee. Each bank has different rules regarding refunds. Typically, the sooner you downgrade after the one year mark the better in terms of getting an annual fee refunded.
Flexible rewards cards considerations
If you have a flexible rewards card, you're probably earning Citi ThankYou Points, Chase Ultimate Rewards®, American Express Membership Rewards, or Capital One miles.
If you close your rewards earning card and you don't have another eligible card, any points that you have remaining in your account will be lost. If you downgrade your card to an eligible no-fee card, where available, you'll be able to keep your rewards.
Examples of Downgrades
Bank guidelines for downgrade options
American Express
If you have card_name or card_name, there are not any no-fee options that you can downgrade your card to.
If you don't want to keep paying your annual fee, you'll need to open a no annual fee Membership Rewards earning credit card, such as the American Express EveryDay card or Blue Business Plus® Credit Card to retain any rewards.
If you do close an American Express card within 30 days you are eligible for a refund of the annual fee. If you are product changing a card, your annual fee will be prorated.
Capital One
Capital One does not issue refunds when you downgrade your card after the annual fee posts.
Downgrade offers can vary by customer. On the Capital One site, click on your card and go to the gear (settings). Then find "See Offers and Upgrades." On that page you should see "Swap Your Card" and when you click on it, you'll see downgrade options.
Chase
When you downgrade a card_name or card_name, Chase gives a 30 day grace period in order to get your fee refunded. After that, the annual fee will be prorated.
After you downgrade a Sapphire card, you will no longer be able to transfer your Ultimate Rewards to transfer partners (unless you have a business card with these benefits).
Chase Sapphire cards can be downgraded to Chase Freedom Flex® or card_name. But my top recommendation is actually to ask for the "Freedom with Ultimate Rewards." It's an older version of a Freedom Flex and is a Visa. It has the 5% rotating categories but will keep you eligible for a Freedom Flex should you decide to open one later.
Airline and hotel card considerations
If you have airline or hotel cards, your points are deposited into your loyalty account when you earn them. You will not lose these points if you close or downgrade the card.
The advantages of downgrading rather than closing these co-branded cards is to keep your credit score high and to get any benefits (such as status or free hotel nights) that come with the no-fee card.
As with flexible rewards cards, when you need to downgrade your card in order to get the annual fee refunded varies by bank.
Cancel the card
There are a lot of reasons you may just want to cancel the card. If you have decided you don't want to keep or downgrade the card, make sure your points are secure and go ahead and call or message the bank to cancel.
If it is airline or hotel card, your points have already been transferred to that hotel or airline loyalty account so cancelling your card will not affect your points. If it is a card that earns bank points, you will need to use or transfer your points before you cancel.
Since business cards do not typically impact your credit, there is no need to keep business cards open past one year if you do not value the benefits of the card.
Most banks will issue a refund of your annual fee as long as you cancel the card within 30 days (American Express, Capital One, Chase, and Citi) or 60 days (Barclays).
Want to read more? Check out our blog post: Ultimate Guide to Closing a Card.
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Retention Offer Script
A printable one-pager with the exact words to use when you call your bank to ask for a retention offer.
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What should you do if you don't want to keep your card after you hit the bonus?
