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One of the questions I get Every. Single. Day. (and with good reason!!!) is “How do I know when to cancel a card?” “Should I cancel a card?” “Will canceling a card affect my credit score?” Let’s discuss!

Before you cancel a card, consider these options:

Do the benefits of this card outweigh the annual fee?

• For instance – do you receive a yearly free night certificate that outweighs the charge of the annual fee? You may want to consider keeping it open. For instance, these 3 credit cards each come with an annual free night certificate, which is worth far more than the annual fee!

• World of Hyatt Credit Card (I keep this card year after year, and I wrote about the Hyatt Family Rate Plan you can read more about here). This card comes with an annual free night certificate.

• Marriott Bonvoy Boundless® Credit Card (My husband or I keep this card year after year). This card comes with an annual free night certificate.

• IHG One Rewards Premier Credit Card (We have had this card, but don’t currently!) This card comes with an annual free night certificate.

Is there an option to downgrade to a no annual fee version of that card? Call or send a secure message to the bank asking for this.

For instance – if you have the Chase Sapphire Preferred® Card (which I personally keep forever), and you’d like to no longer pay an annual fee. You may choose to downgrade to the Chase Freedom Unlimited®. Typically, to downgrade a card you will call the bank and say “I would like to downgrade my Sapphire Card to a no annual fee card.” They will then likely ask “Which no annual fee card?” You would then explain the Freedom Unlimited. You may be able to do this by sending a secure message to the bank, though last time I did this, I was asked to call.

Another example may take place when you have a premium card with a HUGE annual fee. For instance, maybe you have the Chase Sapphire Reserve® card and you would like to downgrade to a lower annual fee Chase Sapphire Preferred® Card by following the same process above.

Is there a retention offer?

• When you call or message the bank, say, “I am considering canceling my _____ card. Before I cancel, are you able to offer a retention offer?” They may be willing to waive the annual fee or give you other benefits that would be worth it for you to keep the card!

• Note: Some credit cards only allow you to reapply and be approved for the same card every 24-48 months. If you are getting a retention offer, make sure that it doesn’t start that clock over if you are interested in opening the card again!
  

Cancel your card.

• Canceling a card doesn’t have to be bad. Just make sure that it isn’t your longest line of credit. You always want to keep the card you have had the longest open. Yep – so if you have an Express credit card from your first year of college – that’s staying with you forever!

• When you cancel a credit card, your credit score may dip for a month or so, but it’ll rebound. It also might open up more credit that the bank is willing to allot you the next time you apply!

xoxo Amber