Yesterday we learned about the Credit Card Calendar, and our seasons of credit card applications. If you haven’t already read that post, you’ll want to before reading ahead. Today we’ll talk about what to do when those cards come knocking for their Annual Fee.
In yesterday’s example I suggested 4 cards. Today we’ll use those same 4 cards as part of our talk on Annual Fees. We will imagine it is 11 months from now. We’ve applied for many more cards in the meantime, and these 4 are set to charge us our annual fee.
The cards aren’t really important, by now (11 months into our CCC) we’ve no doubt opened many more, possibly even duplicates of some of them. Keeping cards open isn’t a very important part of Milenomics. Also our usage has dropped off significantly as new cards caught our eye and earned our spending.
Milenomics uses the following 3 techniques to evade annual fees:
- 1) Calling and asking for an annual fee waiver.
- 2) Downgrading the card to something without an annual fee
- 3) Merging the credit line with another card we have.
Each of these has its pluses and minuses. I’ll step through them as we discuss what to do with our 4 example cards from yesterday.
With all four of our example cards, and with every card that has an annual fee come due, you first start by calling and asking for a fee waiver. I don’t come outright and say “waive my fees!” although I know some who do. I usually take a more subtle approach, and use the phrase “I’ve got too many great cards, and just need to cut back on my fees.” A good way to start might also be “When is my annual fee due to be charged?” and then when they tell you soon you can reply by asking if they can waive the fee, or go into your talk about cancelling.
This is also a good time to learn the importance of hanging up the phone. If there hasn’t been an offer to transfer you to the retention department* within the first few minutes, or an offer to “see what we can do.” thank the rep and call back the next day. If they start outlining the benefits of the card you’re better off saying “oh, you’re right,” and hanging up.
Note: The people on the phone you talk to are people. This is important to remember this all throughout the travel and miles game. In your Milenomics endeavors treat people the way you would want to be treated. Remember they have to sit and answer a phone all day long, and talk to many irate customers.
Our second weapon is to downgrade to a no fee card from the same issuing bank. Why would we want to do this? you might ask. Well the reasons are twofold. First, you always want to preserve the line of credit. The more available credit you have the easier it will be to get cards in the future. The available (unused) credit will help your credit utilization, and in the long run raise your credit score.
Secondly, and something i’ll talk more about tomorrow: Sometimes no fee versions of cards are just as good–or maybe even better than the fee version. If you’re rarely using the card anymore you can keep it in your dresser drawer for a rainy day.
Our last technique is to merge credit lines with another card we have. While this doesn’t give you the benefits of a no-fee card you do preserve the line of credit. Some banks, like chase, will only allow you to merge a maximum amount. If there is a cap, or they won’t let you move your line of credit, stick with downgrading to a no fee card.
Merging can also be helpful when you get into more advanced Milenomics and you really need those high credit lines. More about that later. 😉
One by one here are our chances at annual fee waivers from yesterday’s cards:
Citi AA Mastercard: pretty much a guarantee. I’ve had different citi AA cards, for years and years and each year I call they’re more than ready with a fee waiver. They will sometimes make a second deal as well, to get me using the card. One year was Use the card 3 times and we’ll waive your annual fee. This past year was just an on the spot waiver. I’d count this as 90% likely to be waived.
Chase MP Explorer Card: Another good case for a waiver. I’ve had this card a few times since 2010, and each time a phone call has ended with a waiver of the Annual Fee. I think your chances will be about the same as the Citi card, 90% that you’ll get a fee waiver.
Chase British Airways Visa: A little tougher. They’ve been known to give out Avios instead of cash for this one. I’d put your chances at a waiver as low as 30%. That said, I’d suggest a downgrade to the Chase Freedom. The freedom is Chase’s no AF card. Tomorrow I’ll be going more in depth on the chase Freedom, and specifically why it is better than the Chase Sapphire Preferred. Lastly, if nothing else, transfer the line of credit to your above MP Explorer Card.
Barclay Bank US Airways Mastercard: Not going to happen. We’ll apply again for this card between now and the annual fee coming up on this one, so for a while you’ll possibly have 2 of this card. Yesterday’s offer we applied for actually had a bonus 10,000 miles each year as part of the offer we signed up for. If this card is still around in 11 months, which I doubt, you’ll get 10,000 miles a week or two before your Annual Fee hits. Wait for those miles, and then call and merge the line to your second version of this card.
As you can see, we’ve taken care of our Annual fees for another 12 months, and we should still have our AA card, our UA card, maybe our BA card, and a now larger credit limit US card. These might be your first calls trying to have annual fees waived, if so it might take you a few calls to gain the confidence to ask for the waiver, or say no to small first offers. That is normal–pretty soon you’ll have made so many of these calls you’ll be a Milenomics pro.
The hardest cards to get a fee waiver on are the American Express Starwood Preferred Guest Card, and the Chase Sapphire Preferred. We’ll be covering those in future CCC posts, but in the meantime if you’re tying to get out of the fees on those my advice is to convert the SPG to a Blue Cash, and the CSP to a Chase Freedom.
Special note: Yesterday I said I hadn’t paid an annual fee in 4 years. After I wrote that I went back and checked some of my notes and saw I actually made money on my fees over the years. The above example from Chase was a small $5 profit. One year they gave me $150 against a $95 annual fee. Citi has also given me miles and a fee waiver.
I’ve also made money by downgrading my AMEX cards to no fee, but then using them on SBS to net $25 per person. Giddy for Points wrote about Small Business Saturday in this post. If you’re not using your Amex on SBS you’re leaving $25-$100 (or more) on the table. I’m ahead the $75 per year in my case by downgrading and then using the SBS credit x 3 cardholders.
As always if you have a question, follow me on Twitter @Milenomics. And stay tuned for our First Milenomics Blog Giveaway sometime this weekend!
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– Written by Sam Simon. All ideas are my own, but I encourage you to see my point of view and I promise I’ll try to do the same. Connect with me on Twitter @Milenomics.