Welcome to a weekly feature on the Renés Points blog. Each week this series covers in a “rookie” way either a Delta or travel related theme and attempts to break down to a basic level each topic. You can read up on all the previous posts HERE. Now on to this week’s feature.
One of the questions those new to the points game, is when do I cancel a travel card and are there other choices. First let’s see what reader Erik asked me in the “Ask Rene” tab here on the blog:
“Hi Rene, I just found you this week and have a question about credit cards. I saw that you keep 40+, but why not cancel them after you receive the [welcome] bonus points? For example, I took my family to London on BA two years ago and got 50K Avios for the [welcome] [from the Chase British Air card]. I then canceled the card. Now I see that they are offering 50K [100K bonus with 20k spend] again, and since I have not had the card for two years I assume that I will get approved. Is there a reason not to do this with all cards (except for the ones that you actually use beyond the [welcome] minimum spend)? I just did the Marriott and Hilton cards and need to know if there is a good reason not to cancel them when I receive the points. Thank you!!” – Erik
Welcome to the blog Erik and some great questions you ask. Now let’s get a few things out of the way. Banks hate, I mean HATE, talk about canceling cards and one major blog with Chase direct affiliate links was once threatened to have their links cut just for mentioning the idea of canceling Chase cards. Yeah, they really don’t want this talked about. Too bad!
But for some banks, like AMEX, I make the argument there is often no reason to cancel and I pay the fee each year because I get so much value back from perks of the card that there is value to me to do so. I like that AMEX incentivizes me to, not only keep a card, but to use it and pay the fee. Very smart on AMEX’s part I think. But all banks are clearly not as smart as AMEX.
So back to Erik’s question. We should remember this basic, for now, list of “rules” for getting a new card bonus from the major banks:
The current Chase rule is if you cancel and wait 2 years after last bonus you can get the new card bonus again. This does not apply to Ultimate Rewards cards they are just saying NO if you have applied for more than 5 cards from ANY bank in the past two years. However, a few folks are still being approved so it is a YMMV with cards like Sapphire, INK and Freedom.
The current AMEX rule is for personal cards, if you have EVER held the card, EVER, you can not get the bonus. The business or OPEN cards are cancel, wait 365+ days, you can get the bonus again.
For Citi is, for the most part, cancel and with 18 months and you can get the new card bonus again.
So yes, Erik, since it has been more than 2 years since you canceled your Chase British Air card you can go for the current 100k offer (after spend) and you should get the full bonus points.
Now on to your other cards you mentioned and the heart of this post, that is, should you consider canceling any specific card? The simple answer is only do so if you must do so or are looking to again get a new card bonus down the road. Here is why.
Having a ton of available credit does not hurt your credit score. Not paying off your cards does. Always always always pay your cards off in full every single month. You are losing if you pay a penny in interest. So this is not a reason to cancel a card, that is, having open credit.
But what if you don’t want to pay the annual fee? Then call and ask the bank to waive the fee for a year. Often they will if you have used the card a bunch (less so if you just met the minimum spend for the new card bonus points). If they will not waive the fee maybe they will offer you some points that make it worth it to you to keep the card and pay the fee. If not, maybe they offer a downgraded card with no fee. Just be careful doing the last one as with a few cards it could mean the loss of points. While I have never heard of a “hard credit pull” for downgrading a card, that might also be a good question to ask.
If all of the above does not work you have options most times if you must close. Again, we want, most times, to keep our open credit as high as we can. With Chase, you can most times move your credit line over to another card (or most of it) before you close. This can help later on with approvals if you want to move some of that credit line over to the new card for approval.
There are exceptions to the consolidating lines. Bank of America is one to avoid doing this as they do a “hard credit pull” to combine existing lines. I would rather just close a card than have that happen. But if you intend to keep and use some BofA card it may be worth it to you to combine the lines. Just know some banks do this so ASK before you make this request.
Another way to possibly avoid a fee is to change a card over to another type of card that has no fee. Sometimes you can even get a new card bonus for doing this with no credit pull. But please be VERY careful doing this with AMEX unless you can get a new card bonus for doing the switch as once you change you have lost the chance to get the new personal card bonus EVER by holding that, whatever card it is, card.
Yet one more way to avoid paying for a card fee is via spend. Many banks offer to waive the annual fee if you meet some kind of spend level. Again, banks are much more willing to waive fees and such if you are a strong user of a card as they are making money on you.
There may be so many perks that paying the annual fee is just worth it to you. Take the Chase IHG card. It is the only card I never ever call to have the fee waived or ask for bonus points or anything. All the perks I get with the card are so valuable to me that I just pay the fee year after year after year. I don’t use the card very often but I love the card. TIP: if you never use a card at all banks tend to simply close a card for inactivity so use them all at least once a year.
Another reason NOT to close a card is one that is your oldest card. It is good to have age to some of your cards. This both improves your credit score and shows credit stability. So keep your oldest card forever and it is great if this card is one with no annual fee or one you don’t mind paying for that is.
Yet one more reason to pay an annual fee is because you have a HUGE credit line with the card and like the flexibly of being able to make large purchases and make a large chunk of points rather quickly. I have a substantial line with one card I like (50k) and use the card often.
You should also consider next year’s travel choices. If you are not going to stay at some hotel or fly some airline paying the fee for that travel card is clearly not that smart. But if you are going to ramp up travel then sure the fee may be worth it.
The last one is the ability to reset the points expiration clock for some programs. Many airlines points expire if you do not have activity of some kind in the account. By using a card now and then you keep resetting that expiration clock. Sure you can use shopping portals or point transfers most times to do the same thing but not as simple as just buying something with a travel card.
Phew! That is quite a list. But all of these are important to consider if it is wise to pay a fee or not on any of your travel cards. If you are like me and have a rather large stack of them, you will consider all these points many times a year. Clearly some cards are worth canceling to get the bonus again down the road while others I will keep or downgrade to maximize perks and points. – René
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