Closing a credit card over its annual fee costs you its credit limit and, eventually, its history on your report. Call the issuer and ask what it will offer to keep you. If the offer falls short, ask to switch to a no-fee card from the same issuer, which keeps the account open.
The day your annual fee posts, a clock starts. You typically have about 30 days to cancel and get the fee back, and that window is when a threat to leave carries the most weight.
Closing the card takes its limit out of your credit utilization, the share of your available credit you’re using, so any balance you carry on other cards counts for more. Its history keeps helping your score only until the closed account falls off your report, up to 10 years later.
A product change keeps the account open instead. The issuer moves you to a different card on the same account, so its history keeps counting. Most product changes also skip the hard inquiry, the credit check that comes with a new application.
Call the number on the back of the card and work through these steps in order:
- Tell the rep the annual fee no longer works for you and ask what they can offer to keep you. Their answer, called a retention offer, often comes as a statement credit, a waived fee, or bonus points.
- Take the offer only if you’d keep using the card at the price it leaves you paying. Some offers also require new spending, which is worth it only if you’d spend that money anyway.
- If it falls short, ask to downgrade to a no-fee card from the same issuer. Before you agree, find out whether your points and credit limit carry over, and redeem any points that won’t.
- If you switch, confirm the annual fee will be refunded before you hang up, since not every issuer refunds it in full on a product change.
A product change works upward too. It can move you to a pricier card, usually without a hard inquiry, though you won’t get that card’s welcome bonus.
Close the card only if the issuer can’t move you to a no-fee card or the card tempts you to overspend. Otherwise, mark the month your annual fee posts on your calendar and call as soon as it does.
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