This is the fourteenth post in a monthlong series that started here. Each post will take about two minutes to read and may include an action item that takes the reader another two minutes to complete. I am writing this for an audience of people who know nothing about frequent flier miles, and my goal is that by the end, you know enough to fly for free anywhere you want to go. Previously Other Credit Card Benefits.

Credit cards are the gift that keeps on giving. A single card gives you so many benefits: a huge sign up bonus, some category bonuses along the way, and other ancillary benefits. There may be one more major source of money or miles in your card though: credit card cancellation negotiations.

Credit card companies want you to keep their card. If you keep their card, you might spend on their card. If you spend on their card, they make money. So if you call up and mention that you’re considering cancelling their card, the banks will very often make you an offer to keep the card. Let’s go through the whole process.

Almost all the cards in the frequent flier mile game have an annual fee. (Many cards waive the fee for the first year, but almost every card is going to charge you a fee twelve months in.) Before this annual fee comes up, I cancel the card unless holding or spending on the card represents incredible ongoing value.

How to Determine Whether to Cancel a Card

It’s a straight cost-benefit analysis.

The cost is the annual fee.

The benefits are the ongoing benefits that I talked about yesterday. Does the card get you a free checked bag on a roundtrip worth $50? Does the card get you a 10% rebate on awards up to 10k miles a year worth about $180?

Add in to the benefits the number of extra miles or points your card will earn you based on how much you expect to spend on the card and its category bonuses. For instance, the Chase Sapphire Preferred offers 2x points on dining and travel. I recently kept the card and paid its annual fee. Among other reasons, I expect to spend $5,000 in those categories on the card this year. That’s 5,000 more points than if I put that $5,000 on another card. I value the extra 5,000 Ultimate Rewards enough to keep the card and pay the fee.

How to Cancel a Card

If you’ve determined that you don’t want to keep a card through its next annual fee, you need to cancel the card. Do not cancel a card within six months of getting it. You will get a bad name with the credit card company. Hold the card until you’ve had it about eight months.

Eight months after getting the card, with four months until the annual fee, I call the number on the back of the card.

When I get a human on the phone, I say politely, “I’m calling to cancel the card. I’m concerned about the annual fee.”

The representative may agree and allow you to cancel the card without offering you anything. In this case, I would hang up without cancelling the card. Maybe calling back in a week or a month will net a retention offer.

In most cases, though, the representative will offer you a deal to keep the card. The deal may take several forms. To keep my Citi AA Amex, I was offered an $85 statement credit after five purchases of any size. To keep my Citi AA Visa, I was offered 3 miles per dollar spent for the next six months.

After the representative offers you a deal to keep the card, ask if there are any other offers. If they offered me a statement credit, I usually say, “Are there any miles offers?” And vice versa.

I then take a minute to consider which offer is best among my choices. Of course, to answer that, you need to have a value for the mile in question. I think the offers that give extra miles per dollar on all spending for several months are usually the weakest offer. A one time cash or miles bonus is better because it lets me focus my spending where I’m getting way more than a few miles per dollar: clearing new sign up bonuses.

I make the call about eight months after getting my card. The reason I do it four months before the annual fee is due is that sometimes I don’t get a retention offer, so I want to be able to call back later to see if I can get one. Also sometimes it takes a month or two for the retention bonus to post. And I want the retention bonus to post before the annual fee is due because the final step may still be cancelling the card.

If you have a retention bonus post, you may still want to cancel a card. If you still want to cancel the card, call back to do so.

You may want to downgrade your card to a different version of the same card instead of outright cancelling. This has the effect of keeping the average age of your accounts–a component of your credit score–higher. But this could stop you from getting certain sign up bonuses in the future.

So I usually just cancel cards outright. Before the card is cancelled, I ask to have the credit line moved to another card issued by the bank. I never want to give up credit that’s been extended. I can use that credit in future reconsideration calls.

Example: You have a the Citi American Airlines AMEX with a $6,000 credit line and the Citi Forward card with a $6,000 credit line, and you’re cancelling the AA AMEX. Ask to have the $6,000 line moved to the forward card, giving you a $12,000 line there.

The reason you want to do this is that part of your credit score is determined by what percentage of your credit line you’re using. Decreasing your total credit line will increase the amount of your credit line you’re using thus lowering your credit score.

Continue to Keeping Miles Active with Dining Programs.

21 COMMENTS

  1. Good morning, so there’s really nothing magic or any type of a math calculation behind cancelling the card after 8 months = 4 months before its 1tst year anniversay, is there? Just your own preference, correct? Actually from my experience when consolidating the credit lines, i.e. moving a credit card limit from one to another a $500 limit/line was always left on the card that was being closed. I was always told they cannot move the entire amount to another card.
    Thank you,

    • My experience is that the requirement to leave at least $500 on the to-be-canceled card is an Amex-specific policy, which I have encountered also. I canceled a Chase personal card last week and was able to transfer the entire $5k credit line to another card before closing. I have done the same at Citi, although Citi has it’s own policies that I encountered recently: 1) they would only transfer a max of $10k of credit line from the to-be-closed card (which had a $20k line, I believe), and 2) they would not let me transfer the credit line to my first choice card because it had been open less than a full year – luckily I had another card that had been opened for more than a year, so it received the $10k.

    • It’s to give myself time to complete any “retention challenge” and have those miles hit my account before the annual fee is due.

  2. FYI, Chase Sapphire (“NOT-preferred”) still gives 2x on dining and no annual fee, so you should only consider the travel category spend as qualifying it for the “keep” category.

  3. I’ve been debating whether or not to cancel the Sapphire Preferred as well since I also have the Chase Ink Plus to transfer to travel partners and the Hyatt card has 2x points on dining, airfare, car rental now as well. I know the Hyatt points are not quite as valuable as UR points but is there any other compelling reason to keep the Sapphire Preferred open? I wanted to keep the Hyatt card because the free Category 4 hotel per year basically covered the annual fee of $75.

    • @ Lantean
      Sapphire Preferred offers a few benefits that are valuable to me: an opportunity to transfer points from Freedom, what almost doubles their value; 7% extra annually on points; 1-1 transfer of points to United, Southwest, BA, Marriott, Hyatt and others that (again) almost doubles the value of points. Finally, one more convenient feature: I can use it to easily prolong the life of my and my wife’s numerous accounts by transferring 1K points when the time comes. Still, I am unsure whether those benefits justify the fee since you can alternate with your spouse and/or apply for a similar new card with Ultimate Rewards.

  4. Huh. Is it really this simple?
    I thought you also had to consider which Bank when deciding when to cancel. Chase is generally happy to move credit around, so you don’t need to cancel a previous Chase card before calling for a new one, you can just offer it up if you need to on the new reconsideration line call. Whereas Citi isn’t generally willing to do this, so you might want to cancel an existing Citi card sometimes before applying for a new one to increase your chances of being approved without a call. American Express I have no idea.

  5. You have such GREAT information! Does adding my husbands social for an authorized user affect his chance of getting the same bonus if he were to apply for the card at a later date? Also, if you had to plan your app-o-ramas a year in advance how would YOU and which ones would you get assuming credit and spending aren’t an issue? Finally, are MRP (AMEX) transferable from person to person? I’m thinking not but can’t seem to find it anywhere.

    • You can both get cards even if you are authorized users on each other cards. AMEX Membership Rewards are not transferable to another person’s Membership Rewards account, but you can transfer your Membership Rewards to anyone’s frequent flyer and hotel accounts.

  6. Re: Transfering Credit Line

    Just yesterday I followed this advice and while cancelling a card asked to transfer my 10k credit line from my Bank of America Virgin Atlantic Amex to another Bank of America card I have. Today I get an email from CreditKarma warning me of a new hard credit pull on my credit history.

    Recalling the conversation on the phone yesterday, I now realize that the agent did ask for all my credit info (SSN, address, income, employer, etc) while doing the transfer. I didn’t think anything of it at the time, but I now realize that, sure enough, she was pulling my credit score.

    So, I’m not sure the advice of transferring credit lines from one card to another w/i the same bank is a good idea. You might want to warn your readers to ask the agent whether doing so will require a hard credit pull. The policy may be different at each bank, but BofA definitely pulled my credit score.

    No hard feelings or anything, I just learned a lesson and wanted to pass the information on. I appreciate your posts immensely!

  7. […] This is the fourteenth post in a monthlong series that started here. Each post will take about two minutes to read and may include an action item that takes the reader another two minutes to complete. I am writing this for an audience of people who know nothing about frequent flier miles, and my goal is that by the end, you know enough to fly for free anywhere you want to go. Previously Cancelling Cards. […]

  8. Gave me a $95 statement credit. Plus for each month during the next 16 months, if I spend $1000 miles, I get an additional 1000 bonus miles. Thanks for advice!

  9. This is probably a stupid question. Last summer, after your presentation in Honolulu, I got the Citi AAdvantage Visa and the AAdvantage Amex and Bank of Hawaii Hawaiian Airlines cards. I cancelled the Hawaiian Airlines and AAdvantage Amex cards. I think I got a fee waiver for an additional year on the Citi AAdvantage Visa. I can’t remember what else I was offered to keep me as a customer. How can I find out what else it was? Do I call Citi? I also just picked up the Barclay Arrival World MasterCard and Chase Sapphire Preferred this summer and have met my spend limits on them. In my mind I am getting more from usage of those 2 cards than from the Citi AAdvange. Am I right?

    • Yes those two are far better for ongoing spend than the AA card.

      If you call, they can probably tell you the retention bonus you got, but it doesn’t matter much because even if it was a temporary bump in mileage earning capability, that would have ended. Now it is back to its regular state, and you can cancel it or ask for another retention bonus.

  10. Hi. I applied for a chase ink plus card 6 months ago since they were offering 50,000 for spending 5000 over 3 months. I spent 6,000, recieved 50,000 then cancelled after the 3 months were over. A few days ago I went to the local branch and tried to apply for the same card again in order to get the signing bonus but they had informed me that since I had already received a signing bonus in the past for this particular card, I would not be eligible for the 50,000 bonus. Now my brother recently applied for chase ink plus because he saw the signing bonus for the ink plus card. So I decided to give it another shot for a chance at getting the bonus again. I was approved instantly and now I am on my way to earning another 50,000 points. I was surprised that I was eligible to receive the bonus points online but not when I went to the local chase branch. Any thoughts? Also I am just wondering if I keep doing this, will this be considered as suspicious behavior by chase and will it affect my credit score negatively if I continue to reap the benefits from credit cards and cancel them immediately. Is there a better more efficient way to go about this that will result in me earning more mileage points or am I doing something wrong? I also just recently applied online for the Citi ExecutiveSM / AAdvantage® World EliteTM MasterCard in order to get 60,000 points for spending 5000 over 3 months and was approved for that. Now I have 2 credit cards which will give me 110000 bonus travelling points for different airlines. How many of these cards can I have at once? How many can I apply for and cancel after receiving my bonus during a calender year to avoid a bad rep with banks? Sorry for the millions of questions but answers to them and tips on how to go about my credit card journeys would be very helpful and much appreciated.

    • Do not repeat this. You should never cancel a card you’ve had less than 9 months. You should alternate between the Ink Plus and Ink Bold. And a lot more. For personalized advice, fill out: milevalue.com/free-credit-card-consultation

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