erikt311

Are there any rules of thumbs or guides to follow for when to cancel a card vs. when to downgrade it to a no-annual-fee card (when possible)? I've read a ton about what cards to get and just completed my first app spree (Amex SPG, Citi ThankYou Premier Vsa and Amex). However, I'm not entirely sure how to figure out when to cancel. Obviously, in most cases I don't want to keep paying a yearly fee unless it's worth it. I've read about cancelling in month 11 (or downgrading to a no-fee card), but nothing really about when to do which

My specific example is the US Airways Mastercard. I've had that for a while (several years - which makes the credit history even more of an incentive to keep). I downgraded it last year to the free card. Should I just close it instead so that someday I'll be able to take advantage of the sign-up bonus again?

caGALINDO

If you "downgrade" you are still opening a 'new line' of credit which will decrease your score for a few months. Even if it doesn't need a new credit check your credit would go down because the average # of years you've had credit will go down.

So downgrading is the same thing as just closing the account and opening a new fee-free card.. basically. So just ask yourself if you need another card.

I think having some non-fee cards are good so you can keep them for the long run and in a few years they will help increase your averaged 'credit history length' leading to a better score.

My friend has 40+ cards and his score is 810 and he's like 25. I think thats overkill but there ya go..

Not sure about the sign up bonus but since that is one of your oldest cards (I'm guessing) I wouldn't close it and most churnable deals work regardless if you cancel the old one or not.

erikt311

Thanks. I wasn't aware that this would still be considered a new line of credit. I'll likely be keeping one or two non-fee cards around anyway (Amex Blue Everyday and the two Fidelity Rewards cards I have), so it sounds like there is no point at all to keeping this US Air "free" card open whatsoever.

That does pose a side-question then. Would I be able to keep this card open just for the heck of it and then still apply for a new US Air "fee" card down the road and take advantage of the bonus sign-up again? Or only if i cancel the free one first?

caGALINDO

I'm not sure about that but it seems pretty logical. I doubt you'd be able to 'transfer' the credit history to a new card or everyone would be doing it.

Ragnarok

To cancel or to downgrade depends on a couple of things

1) Is the card churnable

If the card allows you to obtain the bonus by applying again later, you should cancel. ( So you can apply again later )

2) Will you need to keep the credit line open for the score / reconsiderations

If your total credit line is not high, you might want to keep the credit line open to keep your credit usage ratio low ( which keeps your credit ) score high

Also, for issuers like Chase, when your application is pending or initially denied, you can request to trade the old card for the new card, and have the application approved that way.

In these cases, you should downgrade instead.

3) To keep your points

e.g. If you have earned Chase UR points / AMEX Membership Rewards Points where you haven't or don't want to redeem yet, you could downgrade your card to a no fee / lower fee card to keep the points.

( Although you will need to open a premium card in the future to transfer the points to FF programs )

MDtR-Chicago

Really depends on how the change is processed. Citi is quite capable of processing a downgrade without a new tradeline, according to the reports people have mentioned here.

yOyOYoo

In my experience, Chase and Citi can easily do a product conversion or downgrade of a card, which:

1. Retains your credit history (number of years with card)
2. Does not lower your credit score since no credit pull is done
3. Does not count as a new tradeline since it's not counted as a new credit card

I don't have experience with this with other banks. Maybe someone else can chime in.

erikt311

Thanks all. If anyone hes any specific experience with the US Airways Mastercard, it would be appreciated.

MDtR-Chicago

There are lots of reports of people able to get a second US card without closing the first, with a call to reconsideration. So your question might not even be relevant.

http://www.flyertalk.com/forum/miles...5k-benies.html

contactcr

This is not correct. Just closing a card will not decrease your average age of accounts.

However, if you opened an entirely new credit line (the posts below indicate you can downgrade without a new line, so non-issue in these cases) it will then be factored in to avg age and bring it down.

You do not immediately lose the years you held a cancelled card for in your avg age calculation. The immediate ding is losing the total credit line which will effect your utilization (some more than others).

oneworld82

If I applied for a card somewhere around mid-September, when should I cancel it? BEfore Mid-September 2013 or before the end of Sep 13 to avoid the annual fee?

Thanks!

gk17

I assume you have other credit cards with longer credit history? If so, try canceling like a month prior to anniversary date just to be safe. Otherwise, downgrade it to a no fee card if possible.

dublin487

You often have a window of either 30 or 60 days after the annual fee is billed to either cancel or downgrade in order to get a refund of the fee

cbn42

This is not necessarily true. Many banks will simply change your credit card to another type of card without an annual fee, while keeping everything the same (card number, credit limit, etc.) On your credit report, this change will not show up.

OnlyOne

This has been my experience.