Keep, downgrade or close?

Every card gets this checkup once a year. It takes me about five minutes.

First: keep it a year

Keep every new card open for at least a year.

Closing a card right after the bonus posts is a quick way to annoy the bank. Some will take the points back, or think twice about approving you next time.

Then ask one question

About a month before the annual fee is due: did this card give us more than it cost?

Then pick one of three.

1. Keep it, and ask for a retention offerCall the number on the back of the card (or use the chat) and say you’re deciding whether to keep it because of the annual fee. Ask if there are any offers for keeping it open. Sometimes there are bonus points or a credit. Sometimes there’s nothing. It costs you five minutes to ask.
2. Downgrade itAsk the bank to switch you to a no-annual-fee version of the card. The account stays open and keeps its history on your credit report. One caution: if this is your only card that lets you transfer those points, use or move the points first.
3. Close itIf it’s been at least a year and there’s no version worth keeping, closing is fine. Use, transfer or combine the points first, because closing your only card in a bank’s program can mean losing them.

The one card I would never close

Your oldest one.

The length of your credit history is part of your score, and closing your oldest card can significantly affect it. If it has an annual fee, downgrade it instead.

A real example

I paid a $95 annual fee on my Chase Sapphire Preferred®. When two of our trips got canceled, the card’s travel protections saved my family $919.75.

I’ll take that trade. I don’t avoid annual fees. I make each one earn its spot.

My simple system

One spreadsheet or notes page. One row per card:

• Whose name it’s in and the date it was opened
• The annual fee and the month it’s due
• What the card gave us this year

Then a calendar reminder a month before each fee. That’s the whole thing.

The bottom line: keep new cards a year, keep your oldest card forever, and make every annual fee prove itself.

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