In 2018, I wanted to get a better handle on my personal credit card portfolio. I went over all of my cards and decided on a set of them I would only keep if the bank offered me a retention offer. I chronicled my calls for the year in this post.
I received some excellent offers from some cards which I kept. Others offered me nothing. Some of those cards I closed, while others I ended up keeping because I still found them valuable.
I was making those retention calls in the middle of the longest run of economic expansion of our lifetime. Banks had little reason to offer me much to remain a cardholder as they’d surely have a new applicant to take my place if I canceled.
How times have changed, and so quickly, too.
It was only two months ago when I looked at the cards we have and picked some of them to put on the cut list.
While my opinions of the cards in that post have not changed, my bargaining position when dealing with the banks has increased significantly.
If you haven’t noticed, the US economy is slowing to a halt. Everyone is looking for a way to flatten the curve, and some have suggested the best way to do that would be to have the entire country stay home for a month.
When you stay home, you’re not spending money (if you even have money to spend). Credit cards make money with the purchases you make, and from the fees you pay. If you aren’t using the cards as much, they at least want to keep collecting the annual fee.
What if you’re no longer traveling like you used to and don’t want to keep paying $99 a year for a card in which you’re not going to be able to take advantage of the benefits? When the annual fee comes up, I’m sure the thought of canceling the card comes to mind.
Say hello to the retention department.
If you’re new to the credit card game, you might not know the treasure chest that the retention department protects. It’s the treasure trove you previously had access to, only if you asked. Just by saying, “I don’t want to pay my annual fee,” you’d be offered bonus miles, annual fee waivers, or bonus multiples worth far more than what you were paying for a card. Those offers dried up over the last several years. Mainly because the strength of the economy meant that banks didn’t have to beg cardholders to stay. They were getting people to sign up for their $550 cards left and right. If you wanted to go, their feelings were “Bye, Felicia!”
I can’t say for sure, but my gut tells me that banks are going to start opening up the spigot to the retention offer fountain again. If you’re already a customer, they’re going to try to do whatever they can to keep you on the account rolls. Waiving annual fees? Done. Bonus points for meeting a spending requirement? Sure. What about 4x points for online spending? We can do that.
Even if you’re in a financial position where canceling a card is the only sensible choice, I’d still suggest calling the number on the back of your card. Let the bank know that you can’t currently justify paying $100 a year for a travel card. See what they’ll offer you. While banks had recently said that they weren’t able to waive fees, I wouldn’t be surprised if that tool suddenly became available to them again.
You see, banks are hoping that this recession will be short-lived. If the economy rebounds, they’re going to want you to have their card in your wallet. It’s usually easier to keep a customer than gain a customer.
Waiving your $99 annual fee is cheaper than offering you 60,000 miles to sign up for their card again.
Welcome back to the world of the retention offer. I hope we don’t stay here for too long.
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This post first appeared on Your Mileage May Vary
1 comment
I agree but I expect to see bigger retention offer later this year. I didn’t get much out of usual in March.