“Do you keep all of your credit cards?!”
I open multiple credit cards a year and one of the most frequently asked questions I get is if I keep all of the credit cards that I open!
The short answer is no, I do not :)
Keep reading for more information on how to decide what to do with a credit card once you’ve opened a new credit card and earned the sign up bonus!
First things first, ALWAYS keep your credit card open for at least a year. It does not look good to credit card companies to close or downgrade a card before that. There are 3 options after the first year of card opening when your annual fee hits your account again. (And yes, I suggest waiting for the annual fee to actually hit your account again. As long as you contact the credit card company within 30 days of the fee hitting, I have found that they will refund the annual fee to you if you decide to downgrade or cancel your card. The exception to this is Capital One. If you are wanting to downgrade to a no-annual-fee Capital One card, I recommend calling before the annual fee hits!)
Option 1 - Continue to keep the card open and pay the annual fee again.
Sometimes the credit card benefits are worth the annual fee to me. For example, I usually keep my hotel credit cards that come with an annual free night open because the free night more than offsets the annual fee.
Option 2 - Downgrade the card to a no annual fee card.
When you downgrade a credit card, you are keeping the line of credit open, but changing your card to a lower-tiered card in the same “product line.” Note that not all credit cards can be downgraded and if you do downgrade, you won’t be eligible for the sign up bonus for the card that you downgrade to.
Option 3 - Cancel the card all together.
The age of your credit has a medium impact on credit score, so don’t cancel your oldest credit card or a card that you’ve had open for years. Most award travelers eventually close credit cards and have found that their credit score is not majorly affected. Before canceling a credit card, be sure to pay off any outstanding balances on your card, cancel any recurring payments associated with the card, and transfer or use any reward points associated with the card so you don’t lose them!
Retention Offer Tip!
Before deciding what to do with your credit card after a year, call the credit card company and ask for a retention offer! Sometimes they will waive the annual fee or offer more points if you spend a certain amount on the card.
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