The dreaded annual fee renewal… Do I keep the card? Do I downgrade to a no annual fee card? This post is going to look at a few of your options and discuss whether it is a good idea to renew, downgrade to a no annual fee, or my personal favorite… beg for a retention offer!
Do I Keep The Card?
As with any annual fee card, you should continue to analyze whether or not you are seeing value in the card. Having an annual fee card often brings perks with it, however if you aren’t seeing value in your points earning, it isn’t worth paying the annual fee. In order to determine how much value you are earning from points, multiply the number of points earned since the last annual fee by .02(2 cents per point). If your product is greater than your annual fee it is worth keeping, however if your product is less than the annual fee then it may be time to reconsider. For example, this year I have earned 330,875 Membership Reward points across my various cards. If we use the formula above, 330875 x .02 = $6,617.50, therefore I see value in keeping my annual fee cards.
Do I Downgrade To A No Annual Fee Card?
It is worth repeating that YOU SHOULD NEVER CANCEL A CREDIT CARD because this lowers several of the key components of your credit score. That being said, lowering your card to a no annual fee is always an option if you are not seeing value. I personally have downgraded my Chase Sapphire Preferred to the Chase Freedom Unlimited, since I was no longer seeing value for the $95 annual fee. One quick phone call to Chase and I was able to downgrade and still keep my points, while no longer paying the annual fee. I personally keep this card for the locations that don’t accept American Express.
Asking For A Retention Offer
Let me first say that retention offers are hit or miss and sometimes it depends on the agent you get. If you find yourself on the fringe of earning value, it is a good idea to reach out to your issuer and ask if you have any retention offers available.
The keys to asking for a retention offer are:
- Ask what your options are for downgrading because you aren’t seeing value in the card and don’t know if you can justify the annual fee
- After they point out the benefits, say ” I understand the benefits but I really can’t justify the annual fee. Is there something AMEX/Chase could do to potentially offset some of the cost?
- The issuer will typically offer you either a statement credit or points for renewing your annual fee. I have seen anywhere from 50K Membership Reward points to a $250 statement credit from Chase.
- If no retention bonus is available, try again in a few days. Keep in mind that every issuer has their own algorithm for how valuable the cardholder is and their willingness to keep you as a client. The more you spend on your card, the more likely you are to get a retention bonus.
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