I remember I was only 20 or 21 when I first signed up for the Business Gold Rewards card. Within a year, I realized I had gotten a little ahead of myself… my sole proprietorship just didn’t need that fancy of a card. The benefits weren’t being used enough to make the card worthwhile.
Have you done the same thing? Perhaps you signed up for an American Express, only to realize later on that your particular card is more than what you need.
Or maybe your AmEx was the right choice when you got it, but now your lifestyle is different, so the fee doesn’t make sense for you.
Whatever the case may be, here are 3 things you need to know before you cancel an American Express card.
1. Depending on your card, downgrading might be an option
My guess would be that the reason you want to cancel is because of the annual fee you’re paying. If that’s the case, you may want to consider downgrading to a lower tier.
Not all of their products have a downgrade option, but most do:
- Charge Cards: These are the Green, Gold, Premier Rewards Gold, and Platinum Cards. You can do a product change within these tiers. For example, you can downgrade from Platinum to Premier Rewards Gold (which has an annual fee of $275 less). Or you can even go from the Platinum to the Green (which is $355 less). Unfortunately, there’s no AmEx charge card that has a $0 annual fee. So if you want to permanently avoid paying an annual fee, canceling will be your only option.
- Blue Cards: If you have the Blue Cash Preferred ($95 annual fee) you can downgrade to the Blue Cash Everyday ($0 annual fee).
- Delta Cards: I’m talking about the AmEx Delta Gold, Delta Platinum, and Delta Reserve. All of these have annual fees, but you can do product changes among them if you still want one of their cards.
Unfortunately, your downgrade has to be within the group. For example, you can’t switch a $450 Platinum Card into a $0 Blue Cash Everyday. That’s not an option.
And if you have any other cards not listed, such as the Costco TrueEarnings or the Starwood, there are no products you can switch to. You would have to cancel them and re-apply for a new American Express.
2. Sometimes you might be incentivized to keep your card
There’s a good reason why you can’t cancel American Express cards online (or cards from any other bank, for that matter). The only way how is to call customer service. The reason is because they would like to speak with you first, to see if you might change your mind.
On occasion, AmEx has been known to offer some customers an incentive for keeping their credit card. It might be a points bonus or a statement credit.
But let me be clear that not everyone will get offered an incentive when they call to cancel. I don’t know the formula they use, but based on forum feedback, it sounds like you have to be a good customer (translation: a customer who uses your card a lot). If you just have a dormant card or are a light spender, my guess would be you probably won’t be offered anything.
It’s important to also realize that these are typically one-off incentives. If you think you can call up every year and request a freebie, you’re dealing with the wrong credit card company.
And a special note about the Platinum Card’s annual fee. I never hear of them waiving it, not even for big spenders.
3. Canceling your card might be the smartest choice
Regardless of who issues the card, it doesn’t make sense paying a high annual fee unless you’re deriving significant value.
A high-end AmEx card like the $450 Platinum is actually a bargain if you regularly use the benefits. But if you’re a light spender and rarely travel, then you just won’t be getting back what you pay. So in many circumstances, it will be smarter to cut your losses and stop paying for a fee-based card.
Which are the best no annual fee reward cards?
- Discover it – This cash back rewards card from Discover has no annual fee and earns you 5% cash back on quarterly rotating categories, a full 1% on all other purchases, and comes with ton of benefits including purchase protection, extended warranty, and more.
- AmEx Blue Cash Everyday – Remember you can only downgrade to this card if you have the Blue Cash Preferred. If you have a different AmEx, you will have to cancel that and do a new application for the Blue Cash Everyday.