So it may be time to say goodbye to that card. You know the one I am writing about: after years of faithful service and trips around the world, the card in your wallet can no longer support your adventure style. It may even be holding you back from earning towards future frugal travels.
With a heavy heart, we pay down the remaining balances, transfer the points to other programs and call the toll-free number on the back of the card for the last time to end our relationship. If only there was a better way to recycle that credit forward.
In fact, there may be. Many banks do not necessarily want to lose your business, because it can be valuable to their overall bottom line. As a result, arrangements can often be made to keep a line of credit active through rather creative means.
Before you put down that card for good, consider all of the alternatives to closure. Here are three easy ways to keep that credit alive and benefiting your next low-cost trip plans.
Get A Retention Bonus
Those who are on the fence about cancelling their card may be able to get a second chance at sparking their relationship once more through a retention bonus. These bonuses engage frugal travelers to keep those cards open through one-time loyalty offers.
Much like the bonuses offered when opening a new qualified credit card account, retention bonuses may offer a boost of points or miles in order to keep an account alive. In exchange, the traveler has to spend a certain amount of money within a certain time period, just as if it were a new account sign-up bonus.
In situations where travelers can still see some value in holding their card, this could be a way to gain maximum value for at least one more year. If the value is not there, then it may be time to move forward to other options.
Downgrade the Card to Another Product
For frugal travelers who are not gaining the total value of their card’s annual fee, but still gain value out of the points, downgrading may be the solution. Some banks may allow you to downgrade your card to a lesser product with a lower – or sometimes no – annual fee!
For example: those who hold the Chase Sapphire Preferred but do not generate enough points to justify the annual fee may be able to ask to downgrade their card to a similar cash back card. As a result, travelers get a card with lower fees and bonus categories that offer cash back for many of the items they purchase on a regular basis.
However, other banks may not be as generous in their downgrading options. In this situation, there is only one course of action left: reallocate the credit to another card.
Re-Allocate the Credit
One of the signs of a healthy credit report is high available credit and low credit utilization. When frugal travelers close a card, the available credit goes down, potentially causing credit utilization to increase. To prevent this from happening, some banks allow travelers to reallocate their available credit to other products.
When applying for a new credit card, some banks may allow account holders to either close one card and transfer available credit to another card, or use some available credit to roll over into a new product. As a result, frugal travelers keep their high credit limits active, thus keeping them in a good place to continue opening new accounts to earn points and miles for years to come. All it takes is one application and a phone call to investigate all available options.
Even though it may be time to close a card, it does not mean that ending a relationship is the only option. Through knowing all the options available, frugal travelers can keep everything on the table to earn miles towards the next great adventure
How have you used old accounts to earn new gains? Share your best tips in the comments below!
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com
Written by Frugal Travel Guy @ http://www.frugaltravelguy.com