99. Annual Credit Card Checkup: Keep, Cancel, or Change Your Rewards Cards

Welcome to Point Me to First Class, the only show for employed professionals, entrepreneurs, and business owners who are looking to optimize their higher-than-average expenses to travel the world. I'm your host, Devon Gimbel, and I believe that your expenses are your greatest untapped asset if you know how to leverage them. Ready to dive into the world of credit card points and miles so you can travel more, travel better, and travel often? Let's get started.

Hello everyone and welcome back to the podcast. It is a new year and with that you likely have new points travel goals. I know I do. And while I definitely spend time every January mapping out my points plan for the year, there's something equally important that I never overlook and that's what we're going to be covering on the podcast today because if you've been in this points hobby for more than a year, you are going to want to make sure to perform an annual exam of your credit card portfolio. Think of this as a way of maintaining the health of your wallet and ensuring that old, outdated, or just no longer useful credit cards to you don't clog up your portfolio.

Luckily, a credit card portfolio annual exam is painless and doesn't involve shots, speculums, or bowel prep, and you don't even have to leave your house so you have nothing to fear. For those of you who are newer in your points journey and haven't yet held any rewards cards for at least one year, don't worry. You'll still wanna follow along so that you're prepared to do an annual checkup on your wallet when the time comes. Keep, cancel, or change? That is the primary question that you're gonna be answering about every single one of the credit cards in your portfolio at minimum once per year as you run through your annual checkup exam.

Now, this doesn't have to be in January necessarily, but I find it's helpful to pick one time of year that works best for you and revisit this process every single year, at least once, maybe twice. So for the rest of the episode today, we are going to be diving into how to do your own credit card portfolio annual checkup, including why this is valuable, how exactly to do one of these, and also some crucial things to be aware of before you make any significant changes downsizing your portfolio. But first, let's talk about why it makes sense to evaluate your entire rewards card portfolio at least once a year. I think that there are three main reasons why you would want to do this.

Number one, this ensures that you're only paying for what you're using. Many mid-level and premium-level rewards credit cards come with an annual fee. This is a set amount of money that you're going to be paying every single year to keep that card account open and active. And while some annual fees are less than $100 a year, other cards can charge $500 or more every single year for you to have that account open. The more rewards cards that you hold, including if you have duplicates of the same card, and if that card happens to also be a premium level card, the more you may find yourself paying in annual fees to keep all of those cards open.

And I'm not at all opposed to paying annual fees on rewards cards, even high annual fees, But I am opposed to paying fees on cards that I no longer get any value out of or that I don't get enough value from to justify the cost of paying that annual fee. But it's hard to make smart decisions about what cards continue to hold value for you and are therefore keepers versus which cards are actually kind of a waste of money for you without going through an easy evaluation process for each of your cards. So whether you're paying $100 in annual fees or $10,000 in annual fees on your rewards cards, the goal is to ensure that every card in your portfolio has a reason for being there.

This brings me to the second reason why it's so useful to do an annual credit card checkup. And that's because what makes a particular credit card useful to you can and likely will change over time. Regularly evaluating your credit card portfolio allows you to keep cards as long as they're working for you and also acknowledges that not every single credit card is going to be a forever card for you. Now, I admittedly do not know a lot about professional football, but my son recently has really enjoyed watching games on TV and it's playoff season or something. So we've had some football on recently. And one thing about American football that is relevant to credit cards is that football teams have a lot of players on them and they don't all do the same exact thing.

There are different positions that require different skills, but all of the positions are important so that the team overall can be successful. And just because a player might be enormously talented in one position doesn't mean that they'd be equally talented playing other positions. The dude who kicks the ball probably would not be as successful as the dude who's supposed to make the tackles and squish people. The same is true of a credit card portfolio. You likely have different cards that perform very different functions in your wallet. If you have high ad spend for your business, you're going to have a rewards credit card that earns you high bonus points for that category of spend. 

If holding and maintaining airline status is a priority for you, likely you're going to have a rewards card that makes earning and keeping that status easier. Every single card in your portfolio has a job. And one benefit of doing an annual evaluation is deciding which credit cards are still doing their job and which ones are done. Some rewards cards are gonna have temporary jobs and some are gonna have permanent jobs. Neither is better than the other, but regularly evaluating your card portfolio will make sure that you're not continuing to pay high annual fees on cards that have finished doing the job that you hired them for.

Similarly, some credit card issuers have rules around how many of their cards or what type of their cards you can hold at any given time. Capital One is one issuer that comes to my mind here. They have a rule that you can only hold one charge card at a time. So if you currently have a Capital One Business Venture X card, you're probably going to get denied if you also apply for a Capital One Business Spark card. Regularly re-evaluating your card portfolio gives you the opportunity to decide if your current cards deserve to keep their spot, or if you'd be better served letting them go in order to make room for new cards that could be a better fit based on your patterns of spend and your travel goals.

And that brings us to the third reason why it's helpful to evaluate your entire rewards card portfolio at least once annually. And that is that things change, and doing an evaluation will help keep your cards aligned with your spend patterns and your travel goals as they shift over time. You may historically have gotten tremendous value from Chase cards or Amex cards and their points, but if your upcoming travel goals revolve around booking an award on a particular airline or hotel through a transfer partner that your current cards don't give you access to, it can make sense to change your credit card composition. That doesn't mean that you'll necessarily want to abandon all of your current cards, but knowing what you want points to do for you in the upcoming year will help you more accurately decide which of your current rewards cards you anticipate using regularly, which ones might get sidelined for a little while, and which ones are up for getting cut from the team entirely.

All right, now that you understand why it can be helpful to do an annual credit card portfolio checkup, let's talk about how to do it and what exactly you should be asking yourself each step of the way. By the end of your annual checkup, you will have answered this simple question for every single rewards credit card that you hold. Are you going to keep it? Are you going to cancel it? Or are you going to change it to a different credit card product? Now I recommend that you review every single one of your current rewards credit cards through this process, as long as that card has been open for at least 12 months.

So if you have any rewards cards currently that have been open for less than 12 months, put those cards aside for now. You never want to cancel a rewards card that you have held for less than one year, because that can reflect very negatively on your relationship with the credit card issuer. They might even rescind or claw back any welcome bonus that you earned on that card, or potentially deny you for future rewards cards that you apply for. Furthermore, there are consumer protection laws in the United States that actually don't allow credit card issuers to product change a credit card in the first year of that account being open. So product changes, which you're gonna learn more about by the end of this episode, those are also off the table for cards that are less than a year old.

So to start your credit card annual checkup, make a list of every single rewards credit card that you currently hold. I find it easy to group these by credit card issuer and then list all my personal cards followed by all of my business cards from that issuer. So I might start with Chase and make a list of all of my personal Chase credit cards, followed by all of my business Chase credit cards. Then I would move on and list all of my Amex cards, Citi cards, Capital One cards, and so on. As a reminder, you're not gonna include any rewards credit card that has been open for less than 12 months on this list. You'll evaluate those cards the next time that you do a credit card checkup once they've passed that one-year mark in age.

So before you can make a decision about whether you ultimately wanna keep, cancel, or change a credit card, you need to gather some information first. I think it's really hard to make decisions if you don't have any data. And the best credit card portfolio is going to be personal to you. You might get tremendous value from a card that your best friend or your colleague chooses to cancel this year. That's totally fine. But you don't wanna make arbitrary decisions about what stays in your portfolio and what goes. So gather the facts first to make this step easier.

For each rewards card that you have, here are five questions that you wanna ask before you can decide the fate of that particular card in your portfolio moving forward. Number one, what type of points does that card earn? Are they transferable points? And if so, which kind? Are they fixed points? i.e. hotel or airline specific points or miles, and if so, which kind? Number two, what is the annual fee for each specific card that you hold? You definitely wanna know what each card is costing you to keep open and how much money in annual fees you are paying overall for all of your points earning cards. Number three, what are all of the perks, benefits, and credits each of your current rewards cards offers? 

Yes, next to each credit card on my list, I will write this out or type this out if you prefer to keep your records in digital form. I'm willing to bet that some or many of your current rewards cards have perks, benefits, or credits that you may not have even been aware of. This step of the process is a great time to get reacquainted with your rewards cards, especially because card issuers can change these benefits over time. Equally important as knowing what benefits your cards offer is knowing which ones you take advantage of. I don't ascribe to the belief that you should be taking advantage of every last little credit every single one of your cards offers.

Personally, with the number of cards that I hold, I find that really tedious, especially if there's a credit or a benefit that is really onerous for me to redeem or as a store or a vendor that I otherwise have no real interest in purchasing from. But I do wanna know all of the perks, benefits, and credits that are potentially available to me for each credit card that I hold, because if there are ones that I would get use out of, that helps me evaluate the overall value of that card to me. So at this stage, I try to consider both how many of the perks, benefits, and credits I historically have used for each rewards credit card that I have, and also make a rough estimate of how likely I am to make use of those in the upcoming year if I continue to keep each specific card account open.

Next on the list of things to evaluate for each rewards credit card you hold is number 4. What role does this particular card play in your ongoing points or travel strategy? Does it have powerful bonus categories that you rely on for sustainable points earning on everyday organic spend? Is it a card that helps you earn status in an airline or hotel program that you value? Does the card give you a benefit that matters to you, like airport lounge access or rental car insurance? Does this card give you access to a specific airline or hotel transfer partner that you can't transfer points to from your other rewards credit cards? 

Being able to identify how each specific credit card in your portfolio is going to contribute to your ongoing points goals this year will help make the decision about whether to continue carrying that card much easier. This is also the step of the review process that will highlight for you the different roles that different cards play in your portfolio. You might have one or a few rewards cards that you opened in the last one to two years where their main purpose was to provide you with a really nice bonus of points in the form of a welcome bonus, but beyond that, you don't envision using very much. That's perfectly fine. 

Remember that some cards serve their purpose simply by earning you a great welcome bonus. And other cards serve their purpose by having a more permanent place in your wallet for ongoing spend. A card does not have to be used every single day in order to be important in your portfolio, but one thing that you want to achieve in this step of the evaluation process is to identify rewards cards that are entirely done serving their purpose, especially if they also have significant annual fees that are going to cost you in order to continue holding them.

At this point, you may have already started identifying some rewards cards that you aren't convinced deserve a permanent place in your portfolio. Make a note or remark next to any individual rewards card that you review that you think might be on the chopping block. But before you make any final decisions, make sure to ask yourself this fifth and last question. That is number five. Does the value you get from each individual card in your portfolio justify paying the annual fee for that card? For no annual fee cards, I would argue that's a pretty easy question to answer. And for the vast majority of folks, I recommend keeping any no annual fee credit card account open indefinitely, even if it is a card that you don't anticipate putting any spend on.

We're gonna get to why I suggest that a little bit later in the episode, but for now, it's important to identify for yourself which credit cards provide you enough value that you think continuing to pay the annual fee is worth it. And again, please note that this step is entirely subjective. I might find enough value in holding an Amex Business Platinum card that carries an annual fee of $695, even though I don't take advantage of the Indeed credit, the Adobe credit, or value Marriott Bonvoy Gold status because of the other features that the card offers and how often I utilize them. You may have a different threshold of the tangible value that you get for certain cards through redeeming credits or benefits in order for you to feel the annual fee is worth paying. What matters most in this step is that for every card that's in your portfolio, especially if you have to pay a fee to keep that card account open and active, that you've decided the card provides enough value for that to make sense for you.

Once you've walked through those five questions for each of your current rewards credit cards, you now have enough data to start making decisions. Now, first things first, you're gonna decide which rewards credit cards you're going to keep for at least another year. Some of these cards will be your everyday points earning workhorses that you frequently put spend on, while other cards that you keep, maybe ones that you use only once or twice a year, but for very specific spend, or that serve other important functions in your card portfolio. Identifying which cards on your list are keepers should be pretty straightforward once you've worked through the five questions that I already covered.

Any card that will earn you a points currency that you value, that offers you a unique bonus category for your anticipated spend, or that provides you with a perk, benefit, or credit that justifies its annual fee gets to stay in your portfolio. And if you're anything like me, most of the cards in your current portfolio will be keepers that you're gonna hang on to. You may even find that some years you wanna keep every single card that you currently have. And that's a great approach if you've systematically reaffirmed for yourself that every card in your portfolio has a purpose.

As you're working through your list of open credit cards, put a little note or symbol next to any card you've decided to keep on your running spreadsheet. Once you've identified the cards that are keepers, it's time to move on to the next step for any rewards card that didn't make the first cut. At this point, you have separated your portfolio into two groups, the cards you plan to keep open probably for at least the next six months to a year, and the cards that you don't wanna keep. But now is not the time where you jump to cancel all of your non-keepers just yet, because there's two more things that you wanna consider first, both of which could be more beneficial for you than just canceling a credit card account outright.

For any rewards card that is older than 12 months old that no longer deserves a spot in your portfolio, now is the time to consider whether you want to inquire about whether a retention offer is available on the card or whether it would make sense for you to product change or trade that card in for another rewards card from the same issuer. So let's walk through these options one by one and talk about what they entail, why they can be better than just canceling a credit card account outright, and what to keep in mind if you choose either option.

Before you cancel a rewards card that you no longer want to keep in your portfolio, consider whether you wanna contact your card issuer and inquire if there's a retention offer available on that credit card. A retention offer is basically just an incentive or a bonus that your credit card issuer might offer you to encourage you to keep a card account open rather than shut it down. Now, it costs credit card issuers more money to go out and find brand new clients than it costs them to retain the ones they already have. So it's possible that you'll get an offer to keep your account open that's worth it for you at least for one more year.

Retention offers can come in different shapes and sizes, including bonus points for putting a certain amount of spend on the card or waiving the card's annual fee, but these offers just might make it worthwhile for you to keep a particular card account open for another year if they offset the cost of continuing to carry that card. Some credit card issuers like American Express have historically been more generous with retention offers than other card issuers, but I don't think it ever hurts to ask a card if you're considering canceling, it has a retention offer available. The worst thing that can happen is that your card issuer says no. For more information about retention offers, including how to actually request one, check out episode number 78 of the podcast. My guest, Dr. Suzy Spadafora and I dive into everything that you need to know about these offers in much more detail on that episode, including how to time when you make a retention offer request, what not to do when requesting a retention offer, and how to improve your chances of success.

But let's say that you're either not interested in a retention offer on a current card that you don't want to keep in your portfolio any longer, or that you inquire about a retention offer and you don't get one. There's still another option. for you before you choose to cancel a card outright. And that is the option to potentially product change the card that you currently hold for another card from the same issuer. Think of this like a trade. You can swap out your current card for a different credit card that could be more useful for you. Oftentimes this can look like trading in a premium level rewards credit card with a high annual fee for a low or no fee credit card from the same issuer. Product changing, especially in the direction from a high annual fee card to a low or no annual fee credit card, has a few advantages over just outright canceling a card that you no longer want to keep.

First, when you product change a card, the account itself remains open. This means that your credit score will be unaffected by the change. You maintain the line of credit available on the card and you maintain the age of that card account. Both of these are really beneficial to your credit score. In fact, if the card that you are considering closing is one of your oldest credit cards, or if it has a significant amount of credit attached to it, you may want to consider product changing to a no annual fee option, even if you never expect to use that card for any spend, just because this move alone will allow you to protect your credit score.

Remember that your credit utilization ratio is the second most important factor in determining your credit score. And so just closing down a credit card and losing access to the credit amount associated with that card, that alone can cause a decrease in your credit score, even if nothing else about your spending changes, simply because your credit utilization ratio will go up. Many premium credit cards will have low or no fee alternatives that you can product change to if you no longer get value from the premium credit card, but don't want to close that account entirely. Each credit card issuer will have their own rules or options around product changing, but in general, you can usually product change to other cards in the same family.

For example, you can product change a Chase Sapphire Preferred or Chase Sapphire Reserve card to one of the no annual fee Chase Freedom cards if you want. You can product change a Chase Ink Business Preferred card to a no annual fee Chase Ink Business Unlimited or Chase Ink Cash card. You can also often product change an airline or hotel co-branded card to another card from the same family as long as it's from the same issuer. Now, most credit card issuers won't let you product change from a personal credit card to a business credit card or vice versa, or product change from a transferable points earning card to an airline or hotel specific credit card vice versa, but some options should be available to you. Your credit card issuer can tell you which specific cards you can product change to based on the card that you currently hold when you contact them.

Now, I've already talked about one of the main benefits of product changing is that you maintain the card age and credit limit of your account, but you can change to a less expensive credit card. The other benefit of product changing is that since the card you're switching to is not considered a new account, your Chase 524 score will not be affected by a product change if that is something that's important to you. But if there's a downside to product changing, it's this. Since you're not opening a new card account, you won't be eligible to earn a welcome bonus on the card you're product changing to. For example, let's say you no longer wanna pay the annual fee on a Chase Ink Business Preferred card and you've decided that you don't wanna keep that card long-term. You can product change that card to the no annual fee, Chase Ink Business Unlimited or Chase Ink Business Cash card, but you won't earn a welcome bonus on whatever card you product change to when you do that. And for a card like either the business cash or the business unlimited card, that can be a bummer because those tend to have really solid welcome bonuses. 

But what you gain from product changing a card, especially a high annual fee card that you no longer want to carry, can outweigh missing out on a welcome bonus. But I do want you to be aware of this aspect of product changing so that you don't get an unwelcome surprise. Overall, product changing a rewards card that you no longer expect to get much use or value from is a great strategy to preserve the health of your credit score and can even be a great method for getting a new card product without sacrificing a hard pull on your credit report or losing a Chase 5/24 slot if you have those saved or earmarked for wishlist cards that you plan on applying for in the near future. 

But let's say that you have a card in your portfolio that you no longer want to hang on to and either you don't get a retention offer on the card or there's no option for you to product change it or you just decide that you really just want to cancel the card and close the account entirely. What do you need to know when you don't want to hang on to a card? Don't want to keep or change a card, but ultimately want to cancel it.

First, the process for canceling a card account is very easy. Once you've paid off the card balance, just contact the issuer and tell them that you want to cancel the account. They'll walk you through the process from there. But before you do that, there are two things that you want to be sure to consider before you cancel a credit card. First, how to protect your rewards, and second, how to protect your credit score. And both of these are equally important.

If you plan to cancel a credit card that earns any type of points or miles, please make absolutely certain before you do that to keep your current rewards safe. The last thing that you want to happen is to close a credit card account and then lose thousands or hundreds of thousands of points or miles that you've worked really hard to earn. Different credit card issuers handle this in different ways, and there are different considerations if the card you're closing is one that earns airline or hotel specific points versus a card that earns transferable points.

Any co-branded airline or hotel credit card is simple. Those cards earn rewards that get directly deposited into your airline or hotel loyalty account once you earn them, so they're always completely safe. Those points or miles, those rewards, they don't live in your credit card account. So if you cancel the card, you're not at risk of losing any of those accrued points or miles. Like I said, they are going to be safe in your airline loyalty account or in your hotel loyalty account.

Transferable points, on the other hand, can be a different story. For an issuer like American Express, your membership rewards points are safe as long as you still have at least one remaining Amex cards that earns membership rewards points as an open account after you cancel the card in question. So let's say that you want to cancel your personal Amex Platinum card. If that is the only Amex Membership Rewards Points earning card that you currently hold from American Express, those points would be at risk if you just outright canceled your card. However, if you also hold another Amex Membership Rewards Points earning card, say a personal Amex Gold card or an Amex Business Platinum card, then you would be totally fine. Your Amex points will still be safe and you don't have to do anything special.

For other credit card issuers, the process is a little bit different. If you want to cancel a Chase credit card that earns their transferable Ultimate Rewards points, your points will be safe as long as you move them to another Chase Ultimate Rewards points earning card before you cancel the card in question. If you don't take the time to do this first, you can lose all of the Chase points associated with that specific card when you cancel it.

Other card issuers have even worse rules around what happens to your points if you cancel a card and close that account. Citi for example has a rule where any Citi thank you points that have accrued to a rewards card will be entirely forfeited if you cancel that card. Now if you happen to have another Citi thank you points earning card open and you transfer your points from the card account that you intend to cancel to your other Citi card account first, those points still expire 90 days after you transfer them. So you better have a plan for how to use those points within 90 days, or you're going to lose them.

Now in this scenario where you don't have another points earning card from the same issuer as the card that you want to cancel, there are still a few options for how you can get value from your points before you close your account. If you don't have the option of moving those points to another card account from the same issuers so that you can keep them safe, you can transfer your transferable points out of your credit card account and to an airline or hotel transfer partner loyalty account first. They will be perfectly safe there.

So an example of this is if you only have one Chase Points earning credit card and you want to cancel that card, you can first transfer all of your Chase Points out to one or more than one of Chase's transfer partners. You could transfer your points out to Air Canada Aeroplan or British Airways or Southwest or Hyatt, or a little bit of all of those. The only downside to this is that remember that transfers are one way, so you will have to carefully decide where you want to send your points and understand that once you transfer them to an airline or hotel transfer partner, those points are stuck there until you use them through that program.

The other option is that you can cash out any points you have, either for a statement credit or to book travel through your credit card portal before you cancel the card, or exchange them for gift cards. These options tend to offer less value for your points than what you'll potentially get from transferring them out to a transfer partner, but they're still better than losing your points entirely or forfeiting them when you close the account. Regardless, the important thing to take away here is that if you've decided to cancel a credit card and close the account, make sure that you have a plan to safeguard your points or your rewards first. Research what options are available to you based on the specific points currency of the card that you want to close, and have a plan for what to do with those points before you request to cancel your card.

The other thing that you want to be sure to consider before you cancel a credit card account is how to protect your credit score. You know that closing a credit card likely means that your credit score will drop, simply because you lose access to the credit line associated with that card, and you also lose the age of that account contributing to your credit score. Now that hit to your credit score may not be that significant in the long run, especially if you have an excellent credit score to begin with. But there is something that you can potentially do to protect your credit score even when you want to cancel a credit card account.

If you hold more than one credit card from a specific issuer, you can sometimes transfer some or all of the credit line on the card that you want to cancel to another credit you have from the same issuer. For example, if you wanna close down a Chase British Airways personal credit card that has a $20,000 credit line, you can request to move some or all of that credit line to your Chase Sapphire Preferred card first. That way, when you cancel the British Airways credit card, you still maintain access to the credit line it had and that is gonna have the effect of preserving your credit utilization ratio and therefore your credit score.

Now, this is a moot point for charge cards that have no preset spending limit, like the Amex personal and business membership rewards points earning cards, but it can come in handy for your traditional credit cards that have designated preset credit limits. The last thing to strategize before canceling a rewards card is to be sure to take advantage of any available credits, perks or benefits before you cancel that card. This ensures that you get that last bit of value from the card before you close it down entirely.

All right, everybody, that is it. You now have everything that you need to know to perform an annual checkup on your credit card portfolio.

But just to recap, first, now is a great time to review your current credit card portfolio and decide which cards you wanna keep, which cards you wanna change, and which cards you want to cancel. Second, use my five question framework to evaluate each of your current rewards cards to make it easy to decide which ones are staying in your portfolio, which ones are worth changing, and which ones are going. Third, just because you don't wanna keep a rewards credit card long-term, doesn't mean that your only option is to cancel it.

Getting a retention offer or product changing the card allows you to preserve your account, your credit score, and can offer new opportunities for points earning by expanding your card portfolio without having to apply for a new rewards card outright. Fourth, if there are rewards cards that you do wanna cancel, make sure to first have a plan in place for protecting your rewards and protecting your credit score before you close that account.

I hope that this episode will help you keep your credit card portfolio strong and healthy as you head into a new year of points earning. And for those of you who would love more hands-on help constructing, evaluating, or updating your credit card portfolio to ensure that you 're earning as many points as quickly and easily as possible, be sure to jump on the wait list for my Points Made Easy course. 

Enrollment is opening in just a few weeks for points made easy, and I'd love to work with you personally inside of the course. Check out www.pointmetofirstclass.com/pointsmadeeasy for more information and to get on the wait list. In the meantime, have a great week everybody.

Thank you for joining me for this week's episode of Point Me to First Class. If you want more tips on turning your expenses into travel, visit pointmetofirstclass.com to learn more. See you next week.