Annual fees are a hot topic amongst people who own several active credit cards in their portfolio. It’s an important topic to discuss to figure out which cards are worth keeping, and which cards are worth scrapping. There are a few options when considering what to do with your card if you no longer want to keep it but would also rather avoid closing a card in fear of affecting one’s credit score. I will discuss these options ahead.

When is it worth it to keep your credit card? What factors come into play when assessing a card’s worth? First off, some cards we can assess the value we receive from these cards right off the bat. With my United MileagePlus Explorer card, I receive a free check in bag on any domestic flight saving me $50 roundtrip. If I fly more than once a year on United, then the $95 annual fee is already not an issue for me, plus I receive priority boarding and other great amenities with this card. However, if you don’t fly United very often then that’s a card I would recommend dumping.

Take for example the Chase Hyatt credit card, my $75 annual fee just came up the other day and I was trying to decide whether or not to keep the card. The Hyatt card offers a perk at the anniversary of your card opening by giving you a free night stay at any of their category 1-4 hotels. This most likely gives me a value of over $75, plus I get platinum status with Hyatt that gives me free upgrades, late check out, free breakfast and other bonuses by keeping the card.

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The Amex Starwood card, and many of the Chase cards are cards definitely worth keeping just for the value of the rewards programs and amount of savings you can get with these cards. However, if you have multiple Chase cards then some of those cards become obsolete and you can downgrade those cards and decide to just keep one of them in your portfolio. Some people have luck asking their credit card companies to waive the fee in order to keep the card for another year, but these instances are proving less common as of late.

How does one downgrade a card? Many cards allow you to downgrade to a non annual fee card to avoid paying the annual fee with your previous card. I can downgrade my Chase Sapphire Preferred to a Chase Sapphire (non annual fee card) or a Chase Freedom card. I can then decide not to use the card anymore and just cut it up, or later upgrade your card to an annual fee card if you so desire. If you really don’t want to keep the card and are intent on closing the card you may do so, but I recommend you avoid closing cards often as they can have a negative impact on your credit score. Before you close a card, you will want to transfer all but $500 of credit from that credit card onto a different card that you use. Once you close a card any credit left on that card can never be regained. Most credit card companies don’t allow you to have more than a certain amount of credit with them, so it’s important to make sure you aren’t losing any of that credit limit capacity. Always make sure the credit cards you keep are in line with your goals and give you the rewards you need to fulfill your objections.

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