Welcome to the keep or cancel credit cards December edition. Some of my most frequents questions I get are “Should I keep or cancel my credit card?” and “What do I do about the annual fee?” I’ll be explaining on some strategies on whether or not to keep or cancel certain credit cards. My annual fee hit on 3 of my credit cards this month and surprisingly they are all Chase credit cards, which I currently hold 9 of their credit cards. Here are the credit cards up for renewal:
1. Chase Ink Plus Business Credit Card
I previously called for a retention bonus for Chase Ink Bold and received 5,000 Ultimate Rewards points which is almost worth the $95 to me. The Chase Ink Plus is worth keeping for me if they offer me a decent retention bonus. This time, I’m shooting for at least 10,000 Ultimate Rewards points because there is not much incentive to carry two Chase Ink credit cards after the sign up bonus. Keep if good retention bonus, cancel if none.
2. Chase Marriott Rewards Credit Card
I signed up for the credit card two years ago for the 70K Marriott points and was able to stay in a couple nice Marriott hotels such as the Residence Inn Munich and Residence Inn Gaslamp. However, Marriott raised most of my favorite properties now to Category 6 and the annual Marriott certificate is for a Category 5 hotels only. There aren’t any Category 5 hotels that I would like to stay at so I probably will cancel this card. I would say that I got pretty good value out of the points. I am actually going to hold onto the credit card until my free night posts and then cancel the credit card. I believe Chase does not claw back the annual certificate. I’m not too worried because Chase refunds your annual fee up to 60 days after it hits. Cancel.
3. Chase United MileagePlus Explorer Credit Card
I signed up for this card when the offer was 55,000 miles last year. After meeting the minimum spend, I put the card aside and decided not to go for the 10,000 United miles after $25,000 spend. The sign up bonus was great, but I don’t see the point in keeping the credit card. The credit card does offer 2 United lounge passes (which I’ve found only mildly impressive) and a free checked in bag. Since I travel mostly with one backpack, I don’t need that benefit. Cancel.
Strategies for closing credit cards
Two things are affected when you close credit cards. Your average age of credit lowers and your amounts owed (credit card utilization) drops slightly because you are losing credit. The average age of credit only makes up 15% of your credit score and the amounts owed is equivalent to 30% of your score.
Before closing a card, I will ask for a retention bonus by calling the number on the back of the card to see if I can get the annual fee waived or bonus points that compensate for the fee to keep my length of credit history up. To protect your amounts owed percentage, always ask to consolidate your credit by transferring the existing credit line to another credit card. For example, if I close my Chase United Mileageplus, I will ask to transfer the credit line to my Chase Freedom credit card. Therefore, my only damage is the 15% length of credit history. If I can minimize the damage to my score, I can continue to churn credit cards. My credit score is according to Barclaycard Arrival’s FICO score is 791, despite holding 20 active credit cards. Note that even though my credit score is high, it can still be tough to be approved for credit cards due to “too many recent credit inquiries.”
Hope you can learn something from this article, I will post the results of my keep or cancel credit cards December edition later on this week. Stay tuned.