Keep or cancel a credit card?
Here’s what to do with your travel hacking credit cards after you hit the sign-up bonus.
If you’re interested in travel hacking, that probably means you’re using credit cards to travel (or would like to). And the easiest and fastest way to accrue the most amount of points and miles for travel is by opening a new travel hacking credit card and hitting the sign-up bonus. While the perks are definitely there, many of these cards also come with an annual fee. These fees can range from $95 to upwards of $600 depending on the credit card company.
For most people, paying thousands of dollars in annual fees doesn’t make sense for them and their travel hacking goals. Here’s what you should think about if you’re wondering whether to keep a card.
Annual Fee
Is there an annual fee? For many people, if there’s no annual fee on their credit card, they keep it open. No harm, no foul – right? We, however, have closed annual fee cards when we simply didn’t want the card open anymore.
Credit Score
Closing a credit card can have an impact on your credit score because it will impact both your available credit (and utilization) and the age of your credit score. If the card you’re thinking of cancelling is one of your oldest cards, it may make more sense to keep open to have an older average age of credit.
Does the card have a high credit limit? Keeping your utilization low is important to show lenders that you’re a responsible credit card user. If the card has a low limit, it won’t hurt much. If it makes up a substantial portion of your available credit, then it may make more sense for you to keep it open.
Benefits
Does the card have benefits you actively use? Does it provide lounge access, free checked bags, credit card insurance, or any perks you’re actively using? Are there multipliers on categories where you accrue a lot of spend like dining or groceries?
Our favorite travel hacking credit card grants access to the Chase travel portal, the value of which cannot be understated.
Many cards with an annual fee are more than worth the benefits, so this is another facet to consider if you’re wondering whether to keep your travel hacking credit card.
How we’ve approached whether to keep or cancel a credit card
As we’ve increased our travel hacking with credit cards, we’ve considered these things after hitting the minimum spend to achieve the sign-up bonus.
Keep – Like we mentioned above, the Chase Sapphire is our number one recommended travel hacking credit card. And it’s also the credit card we started our journey with and continue to have, in spite of the $95 annual fee. It’s a card we each have in our wallets thanks to the benefits provided and have no plans to cancel at any time soon. Other mainstays in our wallet include the Freedom Unlimited, which is a great everyday credit card, and the American Express Gold, which we like for the 4x on groceries.
Cancel – P1 cancelled a Chase Ink Unlimited a few months ago – details are outlined in this post. The card has no annual fee but wasn’t really serving a purpose for us. P2 cancelled his American Express Green card – similar to the above, it wasn’t serving a purpose for our travel hacking goals.
Downgrade – the third option is to downgrade. If you’re familiar with the Chase Sapphire, you can earn the sign-up bonus every 48 months. Since it was our first travel hacking card, it’s one of the older cards we have. We didn’t want to lose the age of credit or the credit line, so when we hit 48 months, we downgraded the card to a no-fee Freedom Flex. Recently P1 downgraded her United Explorer card ($95 annual fee) to a United Gateway card. Because P2 has a United Club Infinite card, the lounge access and free checked bags for us are already covered. If you have a two-player strategy, determine if you both need the card or if one card can suffice.
Summary
There isn’t one right answer when it comes to keeping, cancelling, or downgrading a credit card. Consider your personal spending and goals before you make any decisions that impact the cards in your wallet and your credit score.