Have you ever seen Footloose? No, not the dumb new version. I haven’t seen that one. The one with Kevin Bacon. It’s legendary. The scene where he gets talked into playing a country version of chicken. He’s driving a tractor while the antagonist is driving the other tractor, there’s awesome 80′s music playing (I Need A Hero by Bonnie Tyler), he gets his shoelace stuck in the pedal, and there’s a Penn (Chris) involved.
Well that’s what I just did with Chase Bank concerning my Chase Sapphire Preferred. I played chicken with them.
The annual fee on my Sapphire Preferred was coming up, so I called in to cancel it. Don’t get wrong, I love my Sapphire Preferred. It gives me 2x points on meals and travel, 0% foreign transaction fee, 7 % annual mileage bonus, and it’s cool as hell. So I wasn’t intending to actually cancel, I just wanted to see if there was a way I could get a retention bonus. [A retention bonus is when the bank backing the card offers to either waive the annual fee or give you a miles credit to keep you as a customer.] If that didn’t work out, the next plan of action was to look into downgrading my Sapphire Preferred to the regular ol Sapphire with no annual fee.
So I called in, spoke with a friendly Chase rep, and wasn’t offered a retention bonus. I was a little shocked by this, because I have never not been offered a retention bonus. I think Chase knows what kind of stud card they have here with the Sapphire Preferred. When I mentioned I wanted to cancel, the game of chicken began. The rep started talking about all the benefits of the Chase Sapphire Preferred. If she only knew how many times I have told people about the same benefits. I was practically finishing her sentences. She was proving the worth of the annual fee, and she really didn’t have to. I really think this card is worth the $95 annual fee, and that’s saying a LOT (I hate annual fees and hardly pay them). I knew all the perks, but she knew them too, so there wasn’t going to be a statement credit to offset my annual fee or points bonus. That’s fine. I’m a big boy and have other options.
The first rule if you don’t like what you are hearing is to politely hang up and call back. I have done this when trying to get an application approval expedited or reconsidered. The rep you talk to does matter, and can absoLUTELY make a difference. I could call right back if I wanted to, or wait a day or two. I will do this.
Pay the Annual Fee
This card really is worth the annual fee. You get 2x points on meals and travel, 7% annual dividend on all miles earned, 0% foreign transaction fee, and you are earning very valuable Ultimate Rewards points. Ultimate Rewards points can be transferred into many of the top travel programs (and to other people). This is a huge benefit. I like flexibility.
I love downgrading cards to no annual fee versions, because then I can just keep them forever building a long average ages of accounts. That’s a plus for my credit score.
When I was on the phone with the Chase rep, she told me about the option of downgrading (or as she said, “transferring” to a card with no annual fee). Of course, I already knew about this method (I’m all knowing). But there are some major differences with Sapphire and Sapphire Preferred beyond the annual fee. The regular Sapphire doesn’t let you transfer your Ultimate Rewards points to the travel partners. That’s a big one. There is a foreign transaction fee, no 2x points on travel, no 7% annual dividend bonus, no 20% off airfare when booking the UR portal, and it’s not made of metal.
I could cancel the card, but that would be foolish, especially because I can easily downgrade the card OR justify paying the annual fee because of the Sapphire’s perks. I usually only cancel Chase cards during the reconsideration phone call. When I’m given no other option than to cancel a current card to be able to be approved for a new card.
NOOB TIP: If you are canceling or downgrading your Sapphire Preferred, TRANSFER your points to your favorite travel program first. OR an even better option is to transfer them to another Ultimate Rewards account of yours (Ink Bold). OR, transfer them into an Ultimate Rewards account of your spouse. Boom.
What to Do?
Alright, here is what I’m probably going to do. Downgrade. I’m downgrading because this allows me to keep my credit account history loooong, and I can keep the card forever. Plus, my wife has a Chase Sapphire Preferred and I can still use hers to earn 2x points on meals. We both also have the Chase Ink Bold, so that’s 4 total Ultimate Rewards household accounts. I don’t need 4 open, so I’ll probably choose to keep my Ink Bold and my wife’s Sapphire Preferred. The Ink Bold has category bonuses that the Sapphire Preferred doesn’t have (2x points on gas, 5x points on office supplies, gift cards at Office Depot, 5x points on cable, internet, and phone services). Plus, the Sapphire Preferred Ultimate Rewards shopping portal and the Ink Bold shopping portals have different spending bonuses.
Every marriage needs an Ink Bold and a Sapphire Preferred, almost as much as honesty and loyalty. Well, not as much. I would gladly pay the annual fee for the Chase Sapphire Preferred if my wife didn’t have the card, but since she does, I’m downgrading. But before I do, I’m transferring all my UR points over to my Ink Bold Ultimate Rewards account.
If you don’t have the Chase Sapphire Preferred or Ink Bold, you should, and you can apply down below. I do receive a referral credit for these two cards; only use my links if you enjoy the service I provide.
— Noob MasterRead More
This last week I had a couple different Noob readers email me and ask about canceling rewards credit cards.
This is a great question and one well worth taking the time to unfold. Canceling credit cards unnecessarily can have a negative impact on your credit. Maintaining a good credit score is vital so you can take advantage of the best interest rates on car and home loans, and of course top rewards credit cards offers. When you cancel a credit card, it will shorten your average age of account. The best thing for your credit score is to have credit accounts with looooong account history. Now that we know this, lets talk about the ways to keep your credit accounts active or to at least get something in return for closing an account (like a new rewards cards with a mega bonus).
NOOB TIP: If you have a credit card that you have had for many years and it doesn’t have an annual fee, DON’T EVER close it. That’s it. Don’t close it. Keep it forever.
NOOB TIP: Never close a rewards card right after receiving a sign-up bonus. Don’t do it. Banks “technically” could take back your sign-up bonus or they could “black list” you. Both of these options are bad.
Using Current Cards during the Reconsideration Phone Call
If you apply for a rewards credit card with a bank and you aren’t instantly approved or are initially denied, you may be able to use a current card as a bargaining chip. For example, Chase has initially denied me a new credit card, but after calling the reconsideration line, Chase approved me by switching over some existing credit from a current card. I have also been approved for a new rewards card for closing a current card. I was able to keep my same credit limit and get a new card with a sign-up bonus valued over $600. That’s when it makes sense to close a credit card. Get something in return from the bank.
Downgrade to a no annual fee card
Nobody wants to pay the annual fee. Nobody. There are only a couple of rewards card that I would even think about paying the annual fee on. A way to get around paying the annual fee while keeping your credit account history is to downgrade to a no fee version of your card. For example, the Chase Sapphire “Preferred” can be downgraded to the regular Sapphire. You will lose some of the Preferred benefits, but you don’t have to pay the annual fee. This is a great option that people don’t talk about enough.
Retention Bonus to Offset
Another trick of the obsessed miles addict (me) is to call and get a retention bonus. The best time to call and try for a retention bonus is a couple months before the annual fee hits. Usually the fee is waived for the first year, so I call around 10 months after activating my card. It takes some brass to perform a retention bonus call because you are actually calling to cancel your credit card. Tell the bank that you are canceling because you don’t want to pay the annual fee. What you are hoping for is that the Bank is going to want to keep you as a customer (they do). In trying to keep you as a customer, they will often given you a credit to offset your annual fee or a miles bonus that justifies your annual fee. Often times the retention bonus I receive is greater than the annual fee, so it’s like I’m getting paid to keep my rewards card. Once again, you are keeping you credit account open and letting it age another year. Goood things.
NOOB TIP: I always run some purchases through a credit card if I haven’t been using it before I try to get a Retention Bonus.
Receiving mega bonuses so you can travel the world for pennies can be fun and very rewarding, but we must be smart when playing this game. Protecting your credit is vital and taking care of your credit accounts will allow you to do just that while not killing your opportunities to earn more miles and points. So the next time you are thinking about canceling your rewards credit card, think through the reconsideration, retention, and downgrade options.
If you have anymore questions about canceling credit cards, don’t hesitate to email me.
— Noob MasterRead More