Reader Question: Hey Parag! Love your blog, thanks for all the helpful tips! Just had a quick question, I got the Chase Sapphire Preferred Visa last year in March. The annual fee is coming due and I don’t really want to pay it. Should I close the card or should I keep it open? I’m really conflicted. Thanks!
This is a great question as I suspect a lot of people will be encountering similar situations in the coming months, as the annual fee for their Chase Sapphire Preferred comes due!
My Chase Sapphire Preferred isn’t up for renewal until June, however I will share what I plan on doing when the annual fee comes due.
1. Reconsideration Bonus
Anytime you want to close a card, doesn’t matter what type of card it is, always call your Bank a few months before the Annual Fee is due and act like you are thinking about closing the card. Although it depends on how long you have been with the Bank, how much money you spend on the card, and who the Credit Card issuer is, you can often get them to either waive the annual fee or provide you with some kind of retention bonus to not close the card. In my opinion I would try to get an annual fee waiver first because it is more valuable. If that doesn’t work, then try and get a retention bonus.
Remember that to acquire you as a customer, Chase spent 50,000 miles! Therefore it is much cheaper in the long run for them to waive your $95 annual fee and keep you as a customer, rather than spend another 50,000 miles to acquire an additional customer!
In my experiences getting reconsideration bonuses, American Express is really good about offering them, while Chase can be a stickler unless you spent a substantial amount on the credit card in the last year. When I had called last year to close my Continental OnePass card, I tried to get a reconsideration bonus but was denied. However when my girlfriend’s Father called to close his Continental OnePass Card, Chase offered him a $100 statement credit. This was likely because he had charged his younger daughter’s $30,000 college tuition on the card, therefore was considered a valuable customer! This is another case of Your Mileage May Vary, however it never hurts to ask!
If for some reason when you are “trying” to close the card and they don’t offer any type of reconsideration bonus, DON’T BE AFRAID TO ASK FOR ONE! I suspect that the “retention specialists” that you get transferred to get bonuses on how well they convert people into staying on the card. Therefore you might as well make their job easier for them and just ask for one. Worst thing they can say is no.
If you get denied for an annual fee waiver or a reconsideration bonus, my advice would then be to ask for a downgrade to the Chase Freedom.
The purpose of downgrading isn’t so much to get another card, it is more to help boost your credit score. By downgrading, you will avoid taking a hit on your credit score for closing an account and at the same time you will also extend the average length of your credit history. Even if you have no use for a downgraded card, I would still suggest you downgrade and then put the new downgraded card in your drawer to collect some dust.
While most downgraded cards are kind of worthless, in my opinion the Chase Freedom is one of the best “everyday” cards for the random months when you don’t have a mileage earning credit card. I would never suggest signing up for the Chase Freedom by itself because there are better cards out there with much larger sign up bonuses. However in this case because you already have a Chase Sapphire Preferred Credit Card open, downgrading will NOT result in a credit inquiry and you will get a semi-decent new card.
Benefits of Chase Freedom
- No Annual Fee
- Rotating 5% Cash Back Quarterly Categories Like Amazon.com, Gas Stations, Restaurants, etc.
- Additional 10% Earning Bonus If You Have A Qualifying Checking Account
If you already have a Chase Freedom (as I do), you may want to consider downgrading to the regular Chase Sapphire Card (yes it does exist!). While there is no annual fee for this card, there is also no 2x points on travel, no annual dividend, and most importantly no cool weighted card! You still however do get 2x points on dining, instant access to customer service, and earn points via Ultimate Rewards.
The only thing to consider when downgrading is that you most likely won’t be eligible for any future sign up bonuses for that specific Credit Card. While this isn’t a huge deal for the Chase Freedom, as the current sign up bonus is only $100 (aka 10,000 miles), the Chase Sapphire currently has a 25,000 point offer. Therefore, I’d recommend downgrading to the Freedom first before considering the regular Chase Sapphire.
Hopefully that answers the question and helps those of you that are trying to decided what to do with your Chase Sapphire Preferred card!
If anyone has any other questions, I am always here to answer them! Just send me an email at FrequentFlyerUniversity@gmail.com or leave a comment below!