Every month I look at a spreadsheet that I keep on my PC that shows me when my credit cards are due to have an annual fee. As a double check, I also write on the front of the cards with a Sharpie to also remind me. In most cases, I churn my cards before I pay an annual fee. There are a few cards that I keep that have benefits that outweigh canceling them so I hang on to them. If I have a card that has a fee due soon and I am not using it, I will cancel the card.
I try to make my first cancellation call 2-3 months before the annual fee will hit me. In the competitive world of travel credit cards, you generally will have an agent on the phone who has agressive offers to retain you. Here are the typical offers you can see:
1. Annual Fee Waived. I have had luck over the years where a credit card company will waive the fee for a year. I may not use the card any longer, but there is no harm in keeping the card for an additional year. Your credit score typically drops 3-7 points when you close an account (it will go back up over a period of a few months) so if you don’t need to cancel the card, you might as well keep it another year. I try to spread my churns throughout the year, but often times I will have several renew close to each other. Some cards periodically have promotions throughout the year where you can earn additional points as well.
2. One time credit. This credit is typically close to the amount as your annual fee, some times a little more. In many cases you can take the credit, make charges equal to or more than that amount, wait a month and then call back and cancel. You keep the credit as free money.
3. A mileage retention offer. I have had card issuers offer 10,000 miles for me to keep a card. If I am close to an award ticket on that airline, it is worth it. Most of my mileage cards are around $85 a year, so 10,000 miles or more is pretty much a wash.
4. A bonus mileage offer. I have had this offered to me a few times, sometimes in combination with my annual fee. They are typically something like charge $X.XX amount and get X bonus miles. If you call early and get the offer, you can make the charges to get the bonus and then call back to cancel again.
5. A downgrade to your current card without an annual fee. Most banks will offer you this at one point or another. They essentially downgrade your card to one without an annual fee that earns less mileage. For instance, you have a card that pays a 1 mile to $1 spent ratio with a fee. They will offer you a free card that pays 1 mile to every $2 spent. No, it won’t help your mileage accounts. The main advantage here is if you are churning a lot of cards at once to avoid fees but don’t want all these recently closing of accounts to hit your account all at once.
In December I started the process of churning cards that would have fees coming up. Two cards offered me deals. Chase offered me a $100 credit on my account to keep my Continental OnePass account. I took the $100 credit, charged $100 of free money and called and cancelled. They did not charge back the $100 and I did it before I was charged an $85 annual fee. It was nice to earn $100 in free money from Chase! I then called Citi Cards to cancel my Citi AAdvantage Visa. I picked it up 2 years ago with the first year free with a sign up bonus. I tried cancelling this card last year, and they gave me an offer that was a combination of waiving my annual fee and giving me a bonus mileage offer. I got the bonus and put the card away all year. In December when I cancelled, I was offered a promotion of 3000 bonus miles after charging $500 on it. I charged the $500, paid the card and waited for the 3000 miles to show up on my American Airlines account and then called back to cancel. $100 and 3000 miles for just a few phone calls. I love churn offers!



