- Author and credit expert Matt Schulz found that he wasn’t making the most of the credit card rewards from a particular card.
- So he called up his credit card company to cancel, and the representative offered him $168 in credit card rewards if he spent $1,000 in the next three months.
- If you have good credit, credit card companies are willing to compromise with you to keep you on as a customer.
You have far more power over your credit card issuers than you realize, but you have to be willing to wield it.
A few weeks ago, I did just that, and there’s no reason you couldn’t do the same. All it took was a phone call.
Here’s what happened …
I called American Express to cancel my Starwood Preferred Guest credit card. It’s a good card; I just don’t use it enough to justify keeping it, given the $95 annual fee.
As you might expect, the AmEx representative expressed her disappointment with my decision and proceeded to remind of many of the card’s best qualities.
Then, she made me an offer: Keep the card, spend $1,000 in the next three months and get 7,000 bonus Starwood points.
I wasn’t surprised they made an offer. If you have decent credit, a credit card issuer isn’t likely to let you just walk away. The credit card marketplace is simply too competitive — and that’s where your power comes from.
The offer’s details did surprise me, though. I figured they’d offer to waive or reduce the fee. I’d been offered similar deals from other issuers, and data has shown that issuers can be flexible with that fee. A 2017 CreditCards.com survey found that 82% of cardholders who requested a waived or reduced annual fee were successful. (The success rate is nearly 90% when asking to waive a late fee or bump up your credit limit, and it is almost 70% when asking for a lower interest rate.) However, in my case, the offer was all about points.
My mind started racing.
How much is 7,000 Starwood points worth?
Is this offer a good deal?
Even if it is a good deal, do I still want to mess with keeping the card?
CreditCards.com’s rewards points evaluations — which compare redemption cost to cash cost — show Starwood points are worth about 2.4 cents per point, among the highest in the rewards space. (Flexibility is a big reason. Along with redeeming points for nights at Starwood hotels, you can also transfer the points to airlines such as American and Delta, who will sometimes offer bonus points for doing so.) That means those 7,000 points are worth $168, significantly more than the card’s $95 annual fee.
It doesn’t take an accountant to understand that spending $95 to get $168 in value makes financial sense. However, the larger question remained: Was it a good enough deal to make me keep the card? As a busy dad with a mile-long to-do list, I wasn’t sure, but I also didn’t have any time to think about it.
Ultimately, I accepted the offer. I travel enough to where the extra points were valuable to me and wouldn’t just end up sitting unused in my account.
However, once I spend the required $1,000, I probably won’t use the card any more than I did before. That means that in 2019 I’ll probably make another phone call, get another offer and weigh keeping the card in my wallet for another year.
If it’s another good deal, I’ll take it. Otherwise, I’ll just walk away.
That’s the power that you have with your card issuer. Don’t be afraid to wield it.
Here are few tips to help you do just that:
- Be persistent but polite: Issuers are often willing to work with you, but if you are too rude or impolite, that can change.
- Don’t get blinded by big bonuses: Rewards are great, but they’re not all that matters. If you’re not comfortable with a card’s APR or fees, you shouldn’t keep the card, regardless of how lucrative the rewards might be.
- Don’t forget about the impact on your credit: Generally, you shouldn’t close a credit card, even if you no longer use it. One exception: if the card has an annual fee. It doesn’t make sense to keep paying an annual fee for a card you no longer use. Instead, close the card and ask for an increased credit limit on one of your other cards from the same issuer (if you have one) to help keep your utilization rate (the ratio of debt to available credit) from rising and hurting your credit. You can also ask to downgrade your card to a no-annual-fee version. Issuers are often happy to do that, ridding you of your annual fee without closing the card.
- Remember you have nothing to lose: It’s just like your parents used to say. “Go ahead and ask. The worst thing that can happen is they say no. But if they say yes, great things can happen.” Listen to your mom and dad. Make the call.
Matt Schulz is senior industry analyst at CreditCards.com. He is also the founder of TalkingInClass.org, which is devoted to improving childhood financial literacy in America.