Since several of my credit cards are coming up on their annual fee, I figured this would be a good time for a post on credit card retention offers. One thing that a lot people that are new to the churning hobby do not realize is that credit card companies will sometimes either waive the annual fee for a card, or offer you some type of bonus to keep you as a cardholder. Sometimes you even get lucky and get both!
What Is A Retention Offer & How Do I Get One?
Simply put, a retention offer is something the credit card companies give you to keep you as a cardholder. To receive it, you simply call the number on the back of your credit card and either ask to speak with a retention specialist, or tell them that you are interested in canceling your card. Generally once you tell the customer service representative that you want to cancel your card, you will be placed on hold and then transferred to a retention specialist. That retention specialist will go over the benefits of the card with you and then look for any special offers on your account.
What Makes Me Eligible For A Retention Offer?
By simply being a cardholder, you should, in theory, be eligible for a retention offer. Does that mean you will definitely get one? No, not really. While there is really no hard evidence of what things the credit card companies (or more specifically, their computers) look at when making decisions on a retention offer, things like how long you have held the card for and how much spend you have put on the card are definitely factors that have an impact. For example, if you only used a card to meet a minimum spend and then put it in your sock drawer, chances are low that you are going to get a retention offer – yet alone a good one. On the other hand, if you’ve held that card for years and use it regularly, your chances are much better that you will receive a retention offer. The bottom line is that the credit card companies like seeing their cardholders using their card(s).
When Should I Call For A Retention Offer?
Really this is completely up to you. Credit card companies like Citi have been known to give retention offers as little as two months after the card has been opened. Generally speaking though, I usually call approximately a month before the annual fee is coming due on any given card. That allows enough extra time to HUCA (hang up and call again) if I do not particularly care for the retention offer that is being made. Alternatively, it also allows for me to plan my strategy for my next round of card applications if I know I will be canceling a card.
What Should I Expect From My Retention Offer?
To be frank, it is never good to expect anything in this game. Generally speaking though, retention offers in come in one of three forms: annual fee credit/waiver, bonus points or a combination of an annual fee credit and bonus points.
Annual Fee Credit/Waiver:
The annual fee credit/waiver is simply the credit card company either providing you a statement credit equal to your annual fee, or waiving the annual fee entirely. If you have an American Express card, they will give you a statement credit rather than waive the annual fee. According to the Amex customer service representative I spoke with recently about a retention offer, “American Express never waives the annual fee because of all the benefits our cards provide.” Regardless of how the credit card company structures it, you are still walking away without having to pay the annual fee.
Sometimes the credit card companies will offer you bonus points to keep your card. These offers can range from a few hundred points to a few thousand points, depending on the card. Bonus points retention offers come in two varieties: instant bonus points and bonus points for hitting a new spend requirement in a set period of time. The instant bonus points are self-explanatory, but the spend requirement bonus points can vary greatly. For example, I was recently offered 500 HHonors bonus points instantly for my American Express Hilton HHonors Surpass and 1,000 additional HHonors bonus points after spending $500 in the next 3 months. Now this is a downright horrible offer (especially considering the spend I have put on that card this year), but it gives you an idea of how the spend requirement bonus points are structured.
Combination Of Annual Fee Credit/Waiver & Bonus Points:
The last retention offer type you may receive in a combination of an annual fee credit/waiver and bonus points. I typically see these offers when I am especially stubborn about not taking the first retention offer I am given. For example, my Barclays AAdvantage Aviator Red card recently came up on its annual fee and I was offered an annual fee waiver plus some instant bonus AAdavantage miles to keep my card. A word of caution though is that American Express generally does not give combination retention offers on their cards, so you are faced with choosing one or other.
Should I Pick The Annual Fee Credit/Waiver Or The Bonus Points?
This is really something that only you can answer as it is a true YMMV (your miles may vary) situation. For example, maybe you really need that extra 10,000 HHonors points for your next award booking and American Express is only offering you a $25 statement credit otherwise. Alternatively, maybe you are points rich and cash poor, in which case the annual fee credit/waiver may be more enticing. Everyone values their points and miles differently, so which retention offer you decide to pick will vary for every situation.
What If I Do Not Get A Retention Offer I Like?
If you do not receive a retention offer you like when you call, do not give up. Thank the customer service representative for their time and try calling back at a later time. It is possible that your next call or two will yield the same retention offer(s), but at least you tried.
What If I Do Not Receive Any Retention Offer?
Well unfortunate, it does happen. In the event that you do not receive a retention offer you are you happy with, you may well decide to cancel the card in lieu of paying the annual fee. Before you cancel the card completely though, ask about downgrading the card to a no fee version. Usually the credit card companies will let you downgrade your card to a no annual fee version without a hard credit pull. Why is this a good thing you ask? Well, it will keep your average age of account (AAoA) credit factor high since you presumably have already held on to that card/account for the past year. This can be a good way to increase your credit score without a hard pull!
If there happens to be no option for downgrading to a no annual fee version of the card you sought a retention offer on and you want to cancel the card completely, remember to ask that your credit line be transferred to one of your other open accounts with that issuer. The reason is that keeping the high credit limit you have helps keep your credit utilization ratio low. Ideally you want to have (and keep) this number below 10%.
Can I Cancel My Card After Taking/Receiving A Retention Offer?
Of course! There are many data points out there of people accepting bonus points from a retention offer and then canceling their card after the bonus points have hit their account to avoid the annual fee. With that said, I do not generally recommend this approach as it could negatively impact your relationship with the issuing bank. Remember, this game is a marathon, not a sprint!
While there is not guarantee that your account will be targeted for a retention offer or bonus, it does not take very long to make the call in to find out. Worst case scenario you have to decide whether you want to keep the card, downgrade it to a no annual fee card, or cancel it all together. Best case scenario, you walk away with a waived annual fee and/or some bonus points. Either way, it is well worth the call.
What is the best retention offer you have received?