Remember travel? Me neither. But you might be sitting on a wallet full of travel credit cards — bygone relics of a time where “traveling” meant more than driving to Trader Joe’s.
These travel cards involve more than just wistfulness, however. Many carry fees that hit every 12 months regardless of how much you use them. In other words, you might be paying for a travel credit card but not reaping any of the benefits sitting at home, scrolling endlessly through Netflix’s “Recommended For You” carousel.
What should you do? Cancel your travel credit cards? Wait out the pandemic and eat the annual fee? Finally watch the TV series “Fargo?”
If you’re considering closing or downgrading a credit card, consider calling the issuer (i.e., bank) and finagling a retention offer. What’s a retention offer? It’s a benefit issuers use to keep you from canceling your card. They come in many forms:
- Points or miles. Your credit card company might offer a second “bonus” of airline, hotel or travel points.
- Statement credit. This is simply some amount of cash refunded on your statement.
- Annual fee reduction or waiver. Similar to the above, this reduces or offsets the annual fee while retaining the benefits of the card.
Keep in mind that retention offers aren’t free passes: They often come with conditions or caveats. For example, you might be offered a $300 statement credit if you spend $3,000 on the card in the next three months. Under normal circumstances that might not be so hard, but consider your current spending before agreeing to any new requirements.
Retention offers are made on a case-by-case basis and sometimes not at all, so don’t go into the conversation expecting anything in particular. Just explain your situation and why it doesn’t make sense for you to keep a card with an annual fee given the pandemic. Then see what they say or offer. Take notes in case you need to call back with a decision.
As with all negotiations, it’s a good idea to try to work together. Indeed, you and the credit card company share similar goals: They don’t want to lose you as a loyal customer, and you don’t want to pay for benefits you’re not using. Don’t say, “What can you give me?” Ask, “How can we make this work?“ And you really do catch more bees with honey (i.e., politeness).
Sometimes a retention offer isn’t enough. Maybe the conditions are too difficult to meet, or you just don’t want to have to deal with the annual fee anymore. In this case, it’s probably time to change or cancel the card.
By “change” I mean keep the account open but downgrade to another lower-fee card from the same issuer (like Chase, Bank of America, etc.). There are a few reasons why you might want to change rather than cancel a card:
- Your credit score might be affected if you close your account, especially if you have had the account for a long time or it represents a large fraction of your available credit.
- You might lose any credit card travel points (like Chase Ultimate Rewards® or American Express Membership Rewards points) you have accumulated with this program. Generally you will not lose points or miles with a specific airline or hotel program, such as United MileagePlus or Marriott Bonvoy.
If you do decide to go ahead and cancel, make sure to use or transfer any points with the program beforehand. Once you close the account, those points might be lost forever.
Use nontravel benefits
Some travel cards offer perks that can be used even during the shelter-in-place era. For example, the Chase Sapphire Reserve® card includes a subscription to, and credit for, the food delivery service DoorDash. A few udon bowls hardly makes up for the card’s enormous annual fee, but it’s at least usable.
Other travel cards are scrambling to offer new benefits that can be used now. Capital One recently made a change to its Venture miles program, allowing cardholders to pay for food delivery and video streaming services using miles. I expect more travel cards will follow suit, introducing spending categories and redemptions applicable to the homebound.
(I personally advocate for “slippers” and “whole wheels of cheese” redemption policies.)
- If you’re paying an annual fee for a travel credit card, call the company and try to get a retention offer.
- If you decide not to take the offer, either change the card to a no-fee alternative or cancel it — but don’t lose those points.
- Keep an eye on nontravel benefits your card might offer.
- Do watch “Fargo.” It lives up to the hype.