When To Keep, Downgrade Or Cancel A Credit Card That Has An Annual Fee

by joeheg

When you have a credit card with an annual fee, you should evaluate every year whether or not the benefits of keeping the card are greater than the cost. This would seem to be an easy thing to do but many variables need to be considered. A card that has great value to one person may be useless to another and therefore when reading posts about if a card is worth it, remember that Your Mileage May Vary. 

So what should you think about when deciding if you should keep a card?

If you’re like us and have over 20 credit cards, annual fees can start to add up quickly. I’m sure the banks would love it if I just kept paying the annual fees every year. I’m not going to do that because there are always new cards, usually with better benefits. I continually drop redundant cards and get newer cards because of large sign-up bonuses or because I think they’re worth holding for the long term.  Knowing the benefits specific to each card and the value you give each of them will help you make an informed decision about whether or not a card is worth keeping. Personally, I try to break these down by category. To help me keep all the information together, I use a spreadsheet listing the annual fee and the date it gets charged, benefits I get from the card, and if I’ve received any previous offers to keep the card (I’ll explain this later in the post). If I think I’m going to cancel the card, I highlight the renewal date to call the bank when the time comes.

Annual Fee (or lack thereof)

If you have a “no annual fee” card, I suggest keeping it, no matter what. These cards are valuable for, if nothing else, developing a long-lasting relationship with a bank. Banks like to see customers stay and value how long you’ve had an account. The average age of accounts is also an important part of your credit score. So hold onto that free credit card you’ve had for forever (but use it every once in a while so the bank doesn’t close it on you).

For cards with annual fees, what you pay should is easy to find out. To start, it would have been on the application for the card. If you don’t remember, a quick Google search will be your best friend. If your card waived the annual fee for the first year, as many of them do, you wouldn’t be on the hook for any cash until the first renewal. While some banks will send a reminder that your annual fee is approaching, just as many of them don’t and they’ll just add it to your bill. If this has happened, you may have until the next statement, or maybe longer, to figure out if the card is worth keeping. Don’t procrastinate too long though, because some banks won’t refund this fee after 30 days, if they offer refunds at all.

Card Benefits

While finding out the annual fee of a credit card is easy, putting a value on the card benefits can be more difficult. Many blogs try to assign a value to each of the card benefits. These amounts can be highly variable (and usually are skewed to make the cards look like a great deal). It’s up to you to determine if the benefits are worth the annual fee.

I’ll give examples of how I figured out the benefits of three cards that had annual fees coming due. I’ll then show what I did in each case.


I’ve used my IHG free night certificate at The Willard InterContinental – Washington D.C.

My original calculations were for the $49 version of this card which is no longer available for applications. I’ve updated the cost and benefits for the newer version of the card 

Annual Fee – $89 per year.

Sign Up Benefits – This card usually has a signup bonus of 80,000 up to 125,000 points when meeting a spending requirement.

Spending Bonus Categories – The IHG card earns 10 points per dollar at IHG hotels, 2 points per dollar at gas stations, grocery stores, and restaurants, and 1 point per dollar everywhere else.

Immediate Benefits – The IHG card gives you immediate Platinum Elite status with the IHG hotel program. That allows you to get a late check out (albeit only at the hotel’s discretion), access to a priority check-in line, room upgrades, and a free night on reward stays of 4 nights or more.

Benefits at account anniversary – On your account anniversary you are provided a free night certificate that is valid at IHG hotels with a current point redemption level of 40,000 points or less.

So that’s the basics of the card. It is worth keeping? I’ll go through all the factors but for me, this is a no-brainer.

I don’t put any real spending on this card.  I have other cards that give me better bonuses at gas stations, restaurants and grocery stores so the only great category is 10 points for IHG stays (I value IHG points at 0.575 cents so 10 points are worth 5.75 cents). This is a better value than other cards, even those which pay 2-3 points per dollar for hotel stays.

I find that with having Platinum Elite status I’ve occasionally received an upgrade to a really nice room or mini-suite. However since I’m usually staying at a Holiday Inn Express or Candlewood Suites for a short stay, this doesn’t really mean that much. It’s a nice perk but not something I put a huge dollar amount on.

The reason I keep this card is the free night certificate. You can think of it as prepaying for a night at any IHG hotel you can book for 40,000 points or less (as long as there is award availability) for $89.  I can’t think of any hotels where you’d lose money if you use this benefit.

Result – KEPT CARD

AAdvantage Aviator Red World Elite Mastercard

Annual Fee – $99 per year.

Sign Up Benefits – This card usually has a sign-up bonus of 60,000 points after making your first purchase. With no minimum spend, it’s a great card if you don’t have a large number of monthly expenses.

Spending bonus Categories – The American AAdvantage Aviator card earns 2X miles for every one dollar spent on eligible American Airlines purchases. The card earns one point per dollar for all other types of spending.

Other Benefits -The Aviator card also provides priority boarding, free first checked bag and a $25 yearly in-flight Wi-Fi credit.

So is this card worth keeping?

I’ve held onto this card for a couple of years. The biggest perk for us was that I also received a 10,000-mile bonus with each renewal in addition to everything mentioned above. Sadly, Barclays discontinued this benefit. I needed to decide if the other benefits were worth it.

If that were all I was looking at, the checked bag fee waiver would pay for the card annual fee if we flew two flight legs on American. I wasn’t willing to lose that benefit.

However, the thing that hurt the card’s value proposition was that it is so easy to get another co-brand American Airlines card. We are both eligible for a new card from Citi, which also offers American Airlines cards, and would rack up another nice sign-up bonus. This is what we did.


Chase Ink Bold Business Card

Please note this card has been discontinued and is no longer open for applications. It has been replaced by the Ink Preferred card. My thought process would be similar if I were considering keeping the Ink Preferred card. 

Annual Fee – $95

Spending bonus Categories – The Ink Bold card has some wonderful bonus categories. You earn 5 Ultimate Rewards points per $1 on the first $50,000 spent at office supply stores, and on phone, internet and cable TV services. You also earn 2 points per dollar on the first $50,000 spent at gas stations and on hotel accommodations (when paid directly to the hotel). All other spending earns 1 point per dollar.

Other Benefits – The Ink Bold offers primary car rental coverage. This means that if you have any damage due to theft or collision, you don’t have to go through your own insurance first. Because this is a business card, you should note that this coverage is only good for car rentals for business use.

So is this card worth keeping?

The Ink Bold is a major part of my points earning strategy. I can pay for phone (landline [ETA: when we had it] and cellular) and our cable/internet bills each month and earn 5X for those monthly bills. I also occasionally use the 5X benefit to buy things at Office Depot or Staples.  I could do better with other cards I have for the other 2X categories. I don’t use the Ink Bold for car rental because our car rentals are usually for pleasure trips and I have similar coverage with the Sapphire Preferred card without the business use restriction.

I’ve held onto this card for several years but I’ve read about how you can get many of the same benefits without paying an annual fee. The way to do this is to downgrade the Ink Bold to the no annual fee Ink Cash card. If you ask, Chase may allow you to change your card without submitting a new application.

I sent a secure message to Chase from their website asking to downgrade my card (Note: Chase no longer allows you to downgrade a card by SM.) After some back and forth with legalese forms, I changed to the Ink Cash card. So what’s the difference?

The Ink Cash card bonus categories are the same for the 5X categories. You earn 2X points for spending at gas stations and restaurants (instead of hotels) and 1 point for all other spending. The spending categories are also capped at $25,000 instead of $50,000. Another difference is that the Ink Cash points are redeemable for cash and not transferrable to airline or hotel programs. However, if you have another Chase card that earns transferrable Ultimate Rewards (like the Sapphire Preferred) here are instructions on how to transfer the points from the Ink Cash to your other Chase card and then transfer them to the airline or hotel.

Since I have a Sapphire Preferred card, I decided to downgrade to the no-fee Ink Cash card.


Three cards, three different results. I’m starting to take a closer look at the cards I have. They need to be making a contribution or off to the shredder they go.

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This post first appeared on Your Mileage May Vary 


Our Weekly Recap: 6/4/17 – 6/10/17 – Your Mileage May Vary June 10, 2017 - 9:01 am

[…] His thoughts on which credit cards to keep, which ones to downgrade and which ones to toss. […]

Biggie F August 3, 2017 - 10:04 pm

Just came across this while Googling around for info on Amex Business Golds Reward, which I picked up about a year ago, but (like you) can’t see any point in keeping when the AF hits, absent a retention offer I am unlikely to get. Just got the IHG card for a trip this summer, and it has already paid out like a bandit. I agree, that’s a keeper. Finally, you did a great job summarizing how to downgrade Chase Ink Bold Business card. I’m finally under 5/24 with Chase, so will get Sapphire Preferred just before the Ink downgrade, so I can keep changing those 5x UR points to Hyatt points. (We have a jones for the Park Hyatt Vendome.)

Anyhow, rare to find such a timely and useful post … with such great font and spacing, too. If you got the Amex Business Platinum last year, too, I’d be interested in your thinking on that one….

joeheg August 4, 2017 - 8:24 am

Thanks for the nice comments about the post.
If closing the AMEX biz gold card, Just make sure you have another MR card from AMEX before cancelling.
I Don’t have Business Plat anymore, had it before but downgraded to Green card. Hoping for an upgrade offer without the prior cardholder language but no luck so far.
I’m keeping my personal plat card because of access to Centurion lounges. Still evaluating if that’s still worth it to me. 5x for airfare is great but is it worth the extra fee when I get 3x from CSR??? I don’t spend THAT much on airfare.


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