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The one thing that people most frequently get hung up about when it comes to travel reward credit cards is the annual fee. It is hard to find a travel rewards credit card that doesn’t charge $50-$450 per year for the privilege of earning points and miles. If it doesn’t, the perks and points are often less than impressive. Sure, some companies offer to waive the annual fee the first year, but after that, is it worth paying the price? Are the rewards worth the cost? We’ll help you figure out if you should cancel or downgrade your credit card.

Editor’s Note: Some of the offers below may have expired or are no longer available on our site. 

Popular Annual Fee Travel Reward Cards

Most of the most lucrative travel rewards cards come with an annual fee. The Chase Sapphire Preferred® Card is $95 per year. You can collect 80,000 bonus points after meeting the minimum spending requirement of $4,000 in 3 months. 

The Platinum Card® from American Express comes with a very high annual fee of $550 (See Rates & Fees) but comes with a suite of benefits that may be beneficial to some travelers. Plus you get 60,000 points if you spend $5,000 in the first three months.

Airline credit cards also offer generous sign-on bonus and fees that are typically waived the first year.

No Annual Fee Reward Cards

If you don’t want a reward card with a fee or are planning to cancel or downgrade your credit card that carries a high annual fee, there are a few cards to choose from.

The Capital One VentureOne card is one of them. The rewards aren’t as good as the Capital One Venture, but it still comes with its own set of unique benefits. It offers 1.25x miles per dollar spent, plus 20,000 bonus miles after you spend $1,000 in the first three months of account opening.

This is equal to $200 in travel. You won’t get that bonus if you are downgrading from the Venture card, but it is available to new cardholders. However, the Capital One® VentureOne® Rewards Credit Card is still worthwhile. Plus, cardholders can transfer miles to over 15+ leading travel loyalty programs, including new Capital One hotel transfer partners.

The Chase Freedom® card and Chase Freedom Unlimited® card are a couple more. The Freedom offers up to 5% cash back per dollar, up to $1,500, on categories that change every quarter. The Freedom Unlimited earns 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back at restaurants, including takeout and eligible delivery services, 3% cash back on drugstore purchases, and 1.5% cash back on all other purchases. There is no limit to how much cash back can be earned.

New Freedom and Freedom Unlimited cardholders can earn a $200 bonus after you spend $500 on purchases in your first 3 months from account opening. Also, earn 5% cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year.

Both cards do charge a foreign transaction fee.

Amex also offers a no annual fee card, the Amex EveryDay® Credit Card from American Express credit card (See Rates & Fees). You can earn up to 1.2 Amex Membership Rewards Point per dollar and you’ll get a 20% point bonus if you use the card for 20 transactions in a month. There’s also a 10,000-point bonus if you spend $1,000 in the first three months. Points earned can also be transferred directly to frequent traveler programs.

The information for the Amex EveryDay® Credit Card has been collected independently by Johnny Jet. The card details on this page have not been reviewed or provided by the card issuer.

Whether you cancel or downgrade your credit card will affect your credit score differently
Whether you cancel or downgrade your credit card will affect your credit score differently

To Cancel or Downgrade Your Credit Card

If you are considering whether to cancel or downgrade your credit card, keep these facts in mind:

  • You may lose any unused points
  • Your credit score might suffer if you don’t have many long-standing credit cards in your name
  • You likely won’t be able to sign up for that card again for 2 years or more
  • You lose any benefits that come with the credit card

For example, in order to use some rewards points, you have to charge purchases to the credit card in order to redeem them. No credit card means no access to points. When you cancel other cards, like ones that earn Chase Ultimate Rewards, Citi ThankYou Points, and Amex Membership Rewards, you run the risk of losing access to those platforms entirely.

As for your credit score, if you have many cards that you’ve had for years, canceling one or two won’t make your score take a dive. But if you regularly open and cancel accounts after only a year, your score could take a hit.

If you signed up for a credit card because of specific benefits, like no foreign transaction fees or free checked baggage, canceling will negate those perks.

Some reward portals may no longer be available to you if you cancel
Some reward portals may no longer be available to you if you cancel

Downgrade Your Credit Cards If Possible

The best option and one that bypasses most of the above concerns is to downgrade your card to a no-fee option instead of cancel. Downgrading allows you to:

  • Hang on to your points
  • Eliminate an annual fee
  • Keep your credit score intact
  • Retain access to the valuable point and redemption systems
  • Retain some card benefits

For example, downgrading your Chase Sapphire Preferred to a Chase Freedom or Freedom Unlimited allows you to continue collecting valuable Ultimate Rewards points. Switching from the Capital One Venture Rewards Credit Card to the Capital One VentureOne Rewards Credit Card means no more annual fee. But, you still have access to the easy-to-use purchase eraser. 

Some downgraded cards even come with similar benefits as their more expensive siblings, like no foreign transaction fees and trip insurance. However, more often than not, point-per-dollar values will weaken with the no-fee cards. But they will help keep your credit score strong and healthy as downgrading doesn’t show up as a cancellation.

Considerations

Do keep in mind that, typically, you won’t get whatever welcome bonus the downgraded card is offering. But it will go a long way in padding your credit score so when you apply for the next travel reward card with a tempting bonus, your credit score won’t take such a hit.

Just keep an eye out for policy changes like foreign transaction fees or foreign exchange fees so you know what to expect if you plan on using the card while traveling in other countries.

The Bottom Line on Canceling or Downgrading a Credit Card

Basically, if you’re wondering whether you should cancel or downgrade your credit card, keep these things in mind:

  • Will canceling hurt my credit score?
  • Will I lose my points and miles if I cancel?
  • Will I be able to get that credit card again if I change my mind?
  • Do I still want access to my card’s specific perks and benefits?

Generally speaking, downgrading to a no annual fee card is almost always a smarter move if you’re considering whether to cancel or downgrade your credit card. It’s a great way to keep the points adding up and keep your account history. 

For rates and fees of The Platinum Card® from American Express, please click here.

For rates and fees of Amex EveryDay® Credit Card from American Express credit card, please click here.

Johnny Jet Editorial
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Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities.

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