How 1 Phone Call Can Get You More Value From Your Credit Card

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It's the credit card trick most consumers aren't using.

If the annual fee on your credit card is coming up for payment, you may be weighing whether the card is worth keeping. The benefits of the best rewards cards can certainly justify their fees, but that's only true if you make the most of them. And if you have multiple credit cards with annual fees, it's more likely that you won't want to pay for all of them.

The typical consumer goes with one of three options: downgrading to a no-annual-fee alternative, canceling the card, or deciding to pay the fee for another year. None of those are necessarily bad ideas, but there is a way you can get a better deal.

How credit card retention offers work

Credit card companies don't want good cardholders who pay their bills on time to cancel. That's why they have what are known as retention offers. These are offers that representatives in the retention department can make to get you to reconsider.

Common examples of retention offers include:

  • An annual fee waiver
  • Bonus rewards
  • A statement credit after you make a set amount of purchases

To provide a firsthand example, I recently called to cancel a card with a $95 annual fee. Although the representative said she couldn't waive it, she could offer me a $95 statement credit that would apply after I made $95 in purchases, which would effectively cancel out the fee. She also offered me 500 bonus points during each of the next 16 billing cycles when I made at least $500 in purchases, for a potential maximum of 8,000 bonus points.

It doesn't take anything special to get these kinds of offers. You just need to make a cancellation call to your card issuer.

And although conventional wisdom is that you have a better chance at a retention offer if you use the card frequently, this isn't a requirement. I also called to cancel a card with a $149 annual fee. With this card, I immediately stopped using it after I got the sign-up bonus, so there was almost 11 months of inactivity. Despite that, the representative still offered to waive the $149 annual fee for me.

Using retention offers to your advantage

A retention offer can get you some extra value from a credit card you weren't sure about keeping, but that's not the only way to take advantage. You can also see what offers are available for credit cards that you don't want to cancel.

Here's what you do -- call the number on the back of your credit card and say that you're thinking about canceling. Make sure you have a cancellation reason ready. One simple reason is that you're not sure the card's benefits are worth its annual fee.

You'll be transferred to the retention department, where you can tell the representative why you want to cancel the card. Then, it's just a matter of seeing what they offer you. This may be negotiable, so don't be afraid to try asking for more. For example, if they offer you 5,000 bonus points for spending $1,000 in three months, ask if they'll bump it up for 10,000 points for $2,000 in spending.

If you receive a retention offer, you can accept it immediately on the call. The worst-case scenario is that they don't offer you anything. In that case, you can tell them that you've changed your mind and decided to keep the card. You don't need to worry about accidentally canceling a card you wanted to keep, because the representative would need to officially confirm the cancellation with you before processing it.

Maximizing your credit card's value

Considering you can check whether you're eligible for a retention offer in one cancellation call, it's smart to do this with all the credit cards you carry. There's a good chance the card issuer will offer you something of value, and there's no work or risk required on your part.

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