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On travel credit cards

Hi,

I hope you are all well and safe.

I have a chase sapphire preferred card I'm thinking of canceling. I'm not going to travel soon and this paying the 95 annual fee would be a waste.

Thoughts? Do you think it would be wise to keep it open in order to avoid lowering my credit?

Posted by
6871 posts

It's a good idea to align your credit card rewards with your actual spending (or else why pay the premium for some cards?). As an example, my rewards are highest for grocery purchases now through AMEX, and I have no use for travel or restaurant dining or even gas rewards in the near future.

You have to calculate the overall value of the card to you. Do you expect the non-travel benefits of the card to exceed the annual cost in the near-term or not? Your credit profile should determine whether the card closing is impactful or negligible, so you have to look at this single card in context of everything else that contributes to your credit score. NerdWallet is a good resource for learning about how credit scores are determined (https://www.nerdwallet.com/blog/finance/what-makes-up-credit-score/). As a share, payment history contributes more to a credit score than other factors.

Posted by
3304 posts

I would find that out specifics of how canceling a credit card would affect my credit rating.

Posted by
1348 posts

You may want to investigate downgrading to a no fee card like the chase freedom card. You can retain any ultimate reward points but may lose transferability. This strategy may also allow you to be eligible for sign up bonus for the sapphire card if you decide you need it in the future.

https://thepointsguy.com/guide/downgrade-chase-credit-card/

Posted by
3491 posts

My concern would be losing any already accumulated benefits that you got while you were paying the annual fee. What are they worth to you? As someone else noted, there is a downgrade path provided by Chase where you keep your points. Or if you really just want to get rid of the card, see what else you might be able to redeem your points for to cover past purchases or to get something you need using points that is not travel related before cancelling.

Unless your credit rating is already marginal, cancelling a card will have minimal impact on your rating and your chances of getting approval for loans. At least it has on mine when I cancelled 2 high limit travel cards recently. I was actually taking a hit to my credit score because I had too much available credit on cards compared to my income. By reducing the total available credit, it added a couple points to my rating which nearly offset the drop from cancelling the cards.

Posted by
5036 posts

We have a Chase British Airways card, and I was planning to cancel it before our fee comes due in December. Unfortunately, our BA refund will be applied to that card, and will probably not be spent until our next trip, more than likely next year.

I hadn't thought about transferring the balance to another card... Hmmmm.... I guess I should look into that.

Posted by
3662 posts

I wouldn’t give the credit rating a thought.

I will say that the Sapphire card has been my favorite churned credit card. The 50,000 sign up bonus points were transferred to BA avois to buy 8 nonstop flights on AA for my wife to visit her sick mother. Like an $800 value, and BA allows free cancellation of points tickets like Southwest Airlines does. The free insurance for rental cars is awesome also (same as Chase United Discover).

Posted by
2721 posts

Hey Jane, if they post a credit to your card, just ask the credit card company to issue you a check.

Posted by
3491 posts

Balance transfers usually come with a fee of 3% to 5% of the amount transferred and is treated like a cash advance.

It would be easier to close the account and ask for a check. Just make sure all expected credits are posted for any refunds before you close the account. You will still receive the credits, maybe, but there will be delays.

Posted by
3662 posts

if they post a credit to your card, just ask the credit card company to issue you a check.

Or they can direct deposit it to your account using the bank information for payment if it is already set up. Just went thru that with an AirBnB refund.

Posted by
5036 posts

Philip, Mark, Tom_MN, I didn't know you could do that! Wow, thanks, guys.

Whenever we do get our refund from BA, I'll check into it.

Posted by
1767 posts

If you have the time and inclination to play the points game, see the website THEPOINTSGUY. Cancelling the one card should have little effect on your credit rating. You might consider opening another card with great sign up bonuses and either no fee or fee waived before you cancel. Last Dec. I booked a couple of flights on United and their website offered a $250 statement credit and 40,000 miles, which I took advantage of.

Posted by
5786 posts

RE: You might consider opening another card....

Try to understand the factors that affect your credit score:
https://www.creditcards.com/credit-card-news/help/5-parts-components-fico-credit-score-6000.php

  1. New credit

While new credit accounts for 10 percent of your total FICO credit
score. But this doesn’t mean that opening multiple credit lines at the
same time will improve your score. In fact, such behavior could
suggest you are in financial trouble by needing significant access to
lots of credit.

“We encourage consumers to apply for and open new credit accounts only
as needed,” Lee said. “New accounts will lower your average account
age, which will have a larger effect on your FICO scores if you don’t
have a lot of other credit information.”

New accounts will lower your average account age, which will have a
larger effect on your FICO scores if you don’t have a lot of other
credit information.”

My Capital One credit card account reports monthly FICO scores and has a credit score simulator. In my situation, if I simulate canceling my oldest credit account, my FICO score wold be reduced by 2 points.

Posted by
3304 posts

I wouldn’t give the credit rating a thought.

Maybe you don’t need to be concerned about your credit.

If one were planning to buy or lease a car, buy a home, or need to apply for any loan given these uncertain times, one’s credit rating is critical.

Posted by
5036 posts

Philip, Mark, Tom_MN: We finally got our refund from British Airways after about 6 or 7 weeks. And this week I got the credit balance transferred to our savings account.

Thank you all for your help. There are so many things we - as individuals - don't know. That's why a forum like this is so helpful.

Posted by
3662 posts

Yes glad it worked out. I’m in the process of unwinding my last trip (of 4), an August wedding that was postponed.

Learning that the downside of grabbing great airfares and the best Airbnb 9 months in advance is having to unwind it all, which is a slow grind, when things fall apart.

Posted by
5036 posts

I think we're finally done. I'm awaiting the final refund, from a train trip from Bologna to Fiumicino. The train line cancelled, so applying for the refund was relatively easy. Haven't received the credit yet though. Everything else is done, with either cash refund or credit for future trips.