Start with what the card gave you
Add up what you actually got from the card in the last year: the credits you used, plus perks you would have paid for, like lounge visits, free nights or checked bags. Put that next to the fee. If it’s well above, keep the card. If it’s close or below, think about the year ahead: will you use more of it, or less?
Your three options
Keep it
If what you get covers the fee, this is the easy one. Some banks offer bonus points or a statement credit to cardholders thinking of closing their account, so it doesn’t hurt to ask what’s available. There’s no guarantee, and it’s up to the bank.
Downgrade it
A downgrade, or product change, switches your card to another card from the same bank, often one with a lower fee or none. The account stays open with the same history and credit line, so your credit isn’t affected the way closing would be. The bank decides which cards you can switch to, usually ones in the same family, like another card from the same airline.
Cancel it
Closing makes sense when you won’t use the card and there’s no lower-fee card to switch to. Go through the list below first.
Before you close or downgrade
- Use or move your points. On many cards, points you haven’t redeemed or moved to another card in the same program are lost when the account closes.
- Check the refund window. Many banks refund the annual fee if you close the card within a set time after the fee posts, often around 30 days. Your card’s terms say how long.
- Think about your credit. Closing a card lowers your total credit limit, which raises the share of it you’re using and can lower your score for a while. A downgrade avoids that.
- Know when the fee posts. It usually shows up on the statement after your card’s anniversary, so you can decide ahead of time.
Know before the fee hits. Premium Finance (free) shows when each card renews and whether it earned back its fee this year, from the credits you’ve used and the perks you count.