Should You Keep, Downgrade, or Cancel a Credit Card After Earning the Sign-Up Bonus?
One of the most common questions in travel hacking isn’t which credit card to open next. It’s what to do with a card after you’ve earned 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 points and miles is by opening a new credit card and earning the welcome offer for tens of thousands of points or miles.
But once you’ve earned that bonus, what happens? Should you keep the card, downgrade it, or cancel it altogether?
Many travel credit cards come with annual fees that range from $95 to more than $800 per year (hi, American Express Platinum). While the perks can absolutely justify those fees, paying hundreds or even thousands of dollars in annual fees across multiple cards doesn’t make sense for everyone.
When we first started travel hacking, this wasn’t something we thought about. The first annual fee card we opened was only $95, which felt like a lot at the time, but was easy to justify keeping year over year. As we continued travel hacking and opening a variety of cards, we realized there wasn’t a one-size-fits-all answer. Some cards have become long-term staples in our wallets. Others have been downgraded to no-annual-fee versions. And a few have been canceled because they no longer add value to our travel hacking stack.
The good news is that you don’t have to keep or cancel every card. In many cases, there is the option to downgrade that can preserve your credit history and keep your annual fees under control.
Here’s how we evaluate every travel rewards card after earning the sign-up bonus.
What Factors We Consider Before Making a Decision
Before deciding whether to keep, downgrade, or cancel a card, we look at several key aspects of the card.
Annual Fee
The first question is simple: does the card have an annual fee?
For many people, if a card has no annual fee, they simply keep it open. No harm, no foul, right?
That can make sense, especially if the card is helping your credit score by increasing your available credit and lengthening your credit history.
That said, we’ve closed no-annual-fee cards before when they simply weren’t serving a purpose anymore. Just because a card doesn’t cost anything doesn’t mean it should stay in your wallet.
For cards with annual fees, we ask ourselves a simple question: Am I getting more value from this card than I’m paying in annual fees?
If the answer is yes, we usually keep it. If the answer is no, we explore downgrading or canceling.
For example, a $95 annual fee may seem expensive at first glance. But if that card provides benefits that save you hundreds of dollars per year, keeping it may be an easy decision. Now if we have a card that costs hundreds in an annual fee, even if it has credits that we use, may lose its place, even if we’ve used all the credit? Why? It’s sometimes too much of a hassle keeping track of the credits that we’d rather not bother with it.
Credit Score Impact
Closing a credit card can affect your credit score, so it’s important to understand the potential impact before making a change. When you close a card, you reduce your total available credit. If you carry balances on other cards, that could increase your credit utilization ratio, which is one factor used in calculating your credit score.
We also look at the age of the account. If the card you’re considering closing is one of your oldest accounts, keeping it open may help maintain a stronger average age of credit over time.
Another factor is the card’s credit limit. If the card only represents a small portion of your total available credit, closing it may have little impact. But if it carries a substantial credit line, it may make more sense to keep the account open or downgrade it rather than canceling outright. You could also request to move the credit to another card with the bank before cancelling.
While travel hacking should never come at the expense of your financial health, it’s worth understanding how your decisions may affect your credit profile.
Benefits and Perks
The next thing we evaluate is whether we’re actively using the card’s benefits.
Does the card provide:
- Airport lounge access?
- Free checked bags?
- Travel insurance?
- Elite status benefits?
- Annual statement credits?
- A free hotel night certificate?
- Bonus earning categories that match your spending?
Many travel rewards cards provide benefits that can easily outweigh their annual fees.
A hotel credit card with a $95 annual fee that provides a free night certificate each year may pay for itself with a single stay. That’s the category our Marriott Bonvoy Boundless falls into. Because we’re loyal to Marriott, we’re always able to use the Free Night Award. And we’ve always used it for a hotel night that would have cost well over $95, which helps us come out ahead of the annual fee without taking into consideration any of the other benefits of the card. Our biggest win was a night over $600 in Boulder, Colorado, a 6x+ return on the fee for that year!
Similarly, airline cards can provide tremendous value through checked bag benefits, priority boarding, and lounge access. Our United Club card remains a staple for us Chicagoans for that reason. We save hundreds on checked bag fees every trip and always go in the lounge pre-departure at O’Hare, our home airport. At many airports, we also go in the United lounge after arrival. These benefits make the $695 worth it to us because of our savings on luggage and food at airports.
One reason we continue to recommend the Chase Sapphire Preferred is because it provides access to the Chase travel ecosystem, including valuable transfer partners that can unlock significant value from your points. Although the Hyatt transfer has sadly been adjusted to 4:3, for just a $95 annual fee, you’re getting a fair amount with this card so we’re comfortable still recommending it.
When evaluating a card, don’t focus only on the annual fee. Consider everything you’re receiving in return.
Your Travel Goals
Your travel goals today may not be the same as they were when you first opened the card. Maybe you used to fly a particular airline regularly but now prefer another. Maybe you used to stay primarily with one hotel chain but have shifted your loyalty elsewhere.
Or maybe you’ve already earned enough points in a specific program and no longer need or want to focus your spending there. Travel hacking strategies evolve, and your credit card portfolio should evolve with them. The card that was perfect for your goals three years ago may no longer make sense today.
Option #1: Keep the Card
Sometimes the answer is simple: keep the card.
If you’re receiving more value from the card than you’re paying in annual fees, there may be no reason to make a change.
Many travel hackers become so focused on earning new sign-up bonuses that they overlook the value of the cards they already have. Some cards deserve a permanent spot in your wallet because of the benefits they provide year after year.
Examples include:
- Cards that provide annual free hotel nights (like the Marriott Bonvoy Boundless)
- Cards with valuable travel protections (Chase Sapphire Preferred or Reserve)
- Cards that unlock airline or hotel transfer partners (Chase Sapphire Preferred or Reserve)
- Cards that earn bonus points in your largest spending categories (American Express Gold offering 4x on groceries and dining)
If a card is helping you travel more for less, keeping it may be the right move.
Option #2: Downgrade the Card
Downgrading is often the most overlooked option in travel hacking. Many credit card issuers allow you to product change from one card to another within the same family.
This can be a great solution if:
- You no longer want to pay the annual fee
- You want to preserve your credit history
- You want to keep your credit line open
- You may want the premium card again in the future
In many cases, downgrading gives you the best of both worlds.
You stop paying the annual fee while maintaining the account’s age and credit line. This can be particularly valuable because it allows you to simplify your wallet without immediately closing accounts.
Before canceling any card, it’s always worth checking whether a downgrade path exists.
Option #3: Cancel the Card
Sometimes canceling is the right answer. If a card no longer fits your travel goals, isn’t providing meaningful value, and doesn’t have an attractive downgrade option, there may be little reason to keep it open.
Many people are hesitant to cancel credit cards because they’re worried about their credit score. While that’s certainly a factor to consider, it shouldn’t prevent you from making the decision. A card that costs money every year and provides little value shouldn’t automatically stay in your wallet forever.
Before canceling, however, make sure you:
- Redeem or transfer any points if necessary
- Use any remaining annual benefits
- Check for retention offers
- Explore downgrade options
Once you’ve done that, canceling may be the best choice.
How We’ve Approached These Decisions
As we’ve increased our travel hacking with credit cards, we’ve faced all three scenarios.
Cards We’ve Kept
Like we mentioned above, the Chase Sapphire Preferred is our number one recommended travel hacking credit card.
It’s also the card that started our travel hacking journey.
Despite the annual fee, it’s a card we each continue to carry because of the value it provides. Between the transfer partners, travel protections, and flexibility of Ultimate Rewards points, we have no plans to cancel it anytime soon.
Other long-term cards in our wallets include the Chase Freedom Unlimited and the American Express Gold.
The Freedom Unlimited is one of our favorite everyday spending cards, while the American Express Gold earns 4x points on groceries, one of our largest spending categories.
Cards We’ve Downgraded
Downgrading has become one of our favorite tools for managing annual fees.
If you’re familiar with the Chase Sapphire cards, you used to be able to earn a Sapphire sign-up bonus every 48 months. Since the Sapphire Preferred was my first travel hacking credit cards, I eventually reached the point where I was eligible for a new bonus.
Rather than canceling the account and losing both the credit line and account history, I downgraded it to a no-annual-fee Freedom Flex. Doing so kept the history of my card relationship, and it gave me additional access to 5x categories like groceries, restaurants, Amazon, and PayPal beyond my original Freedom card. These points go towards our joint Ultimate Rewards haul, so it’s a nice complement to the cards already in our system.
The first airline card I opened was the United Explorer, which at the time had a $95 annual fee that has since increased to $150 after the first year of holding the card. After having the card for a year, I opted to downgrade/product change to a United Gateway, which is their no-annual-fee offering.
Because P2 carries a United Club Infinite Card, the benefits of the Explorer we were already covered for the two of us.If you use a two-player strategy for travel hacking, it’s worth evaluating whether both people truly need the same card or whether one cardholder can provide the benefits for the household.
I could have opted to cancel since the explorer was not one of my oldest cards nor did it have a significant credit line, but I downgraded due to one perk: the 25% bonus on MileagePlus X. If you hold any United card, you earn 25% additional miles when you make a purchase through MileagePlus X, regardless of the card you actually make the purchase on. The MileagePlus X app is possibly my favorite travel hacking app, so this was a no-brainer benefit, earning me thousands of extra miles annually.
So in some cases, the reasoning for downgrading may not be obvious, but it’s worth evaluating what you may lose if you were to cancel the card completely.
Cards We’ve Canceled
We’ve also canceled cards that no longer served a purpose. I canceled a Chase Ink Unlimited card a few years ago. While the card had no annual fee, it wasn’t really contributing to our overall travel strategy and I didn’t want one more card to remember that I had. It was a newer card in my wallet and had a low credit line, so cancelling the card had no impact on my credit score.
Similarly, P2 canceled an American Express Green Card because it no longer aligned with our goals. In both cases, we evaluated the benefits, earning structure, and role each card played in our wallet.
The answer was simple: neither card was providing enough value to justify keeping it open.
Our Simple Decision Framework
Whenever an annual fee posts, we run through the same checklist:
- Am I getting more value than the annual fee?
- Do I actively use the benefits?
- Does the card support my current travel goals?
- Is there a downgrade available?
- What impact would canceling have on my credit score?
Most of the time, the answer becomes obvious once we’ve worked through those questions.
Final Thoughts
There isn’t one right answer when it comes to keeping, downgrading, or canceling a travel rewards credit card. Like pretty much everything in travel hacking, the answer is “it depends”. The right decision depends on your travel goals, spending habits, annual fees, and overall credit profile.
For some cards, paying the annual fee year after year makes perfect sense because the benefits far exceed the cost. For others, downgrading can preserve your credit history while eliminating the fee. And sometimes, the best option is simply to cancel the card and move on.
Before making any changes, take a few minutes to evaluate how the card fits into your overall travel strategy. A thoughtful decision today can help you maximize both your points and your wallet for years to come.