If you currently use a travel rewards credit card, or if you’re a travel junkie with multiple cards, you may be wondering what to do when your upcoming annual fee kicks in.
Many great travel credit cards come with valuable perks like free checked bags, free airport lounge visits and annual travel credits, not to mention the valuable points and miles they earn. Since you’re not traveling for leisure now (and probably won’t be for the immediate future), does it make sense to keep these cards?
If you’re thinking about giving the ax to any of them as a result of the COVID-19 pandemic, you may want to consider asking for a retention offer before you cancel your account.
What’s a retention offer?
A retention offer is something extra that a bank gives you in exchange for keeping your account open. Many people don’t know they're possible.
How generous those offers are can vary greatly based on issuers, credit cards and even how much you’ve spent on the card in the past year. And sometimes you won’t get any retention offer at all.
Here are some examples of common retention offers an issuer could make:
Statement credit: You may get an offer to receive a cash amount in the form of a statement credit. This credit may come with minimum spending requirements you must hit. For example, you could be offered a $300 statement credit if you spend $3,000 on your card over the next three months. Or, you might be offered a $50 statement credit for keeping the card open with no spending requirements.
Bonus points: Instead of a statement credit, you may be offered a certain number of bonus points or miles for keeping your card open. For instance, you might be offered the opportunity to earn 20,000 extra points when you spend $4,000 in four months.
Annual fee reduction or waiver: Sometimes, you may get an offer to reduce or even fully waive the annual fee on the card for the next year. This probably won’t happen with a premium card that charges several hundred dollars per year to hold the card, but it might happen with a card with a lower annual fee.
What to know about retention offers
The first rule of thumb is that you probably won’t get what you don’t ask for. In most cases, you’ll need to be proactive about asking your credit card issuer for a retention offer.
In the wake of coronavirus, customers of at least one credit card have gotten some extra credit toward their annual fee without asking. Some people who hold the Chase Sapphire Reserve® and are due to pay their annual fee between April 1 and July 1, 2020, have been granted a one-time $100 credit to help offset their annual fee. (Chase recently increased the fee on this card by $100.)
Calling the bank is the best way to ask for a retention offer. But be aware of the potential for long hold times to reach a representative. Banks are swamped with coronavirus-related calls and have warned customers on their websites to expect extremely long waits. Still, some customers (myself included) have been able to get through on the phone easily. When I called to ask for retention offers, I got right through to AmEx and waited only 10 minutes for a Chase representative.
Tips to keep in mind
If you’re on the fence about ditching your card, here are some things to keep in mind when you’re considering a retention offer:
Don’t say "cancel" (at first): Do not tell the automated phone system that you’re interested in canceling your card. The computer may cancel your card automatically once it hears that word, and then the decision is out of your hands.
Crunch the numbers: Do you have enough expenses to put on the card right now to meet any retention spending requirement? How many points or miles would make it worth it to you? You can do some of this math ahead of time so you’re ready for the offer.
Consider downgrading instead: If you don’t receive a retention offer (or it’s not enough to get you excited), ask if there’s a no-annual fee version you could downgrade to. This keeps your credit active but removes the cost of the annual fee.
Be nice: It’s always a good rule of thumb to be kind when making a request, but it's especially true in times like these when call volume is very high and everyone is dealing with coronavirus-related issues.
Your travel credit card (or cards) may not make sense for your budget and spending any longer. Whether or not you get a retention offer, make sure you understand the potential impact that canceling a card could have on your credit score.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2021, including those best for:
Flexibility, point transfers and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Bank of America® Travel Rewards credit card
Flat-rate travel rewards: Capital One Venture Rewards Credit Card
Bonus travel rewards and high-end perks: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card