Don’t cancel that card until you’ve tried for a retention bonus

When you try to close a card, your bank might try to keep your business by promising extra rewards or waived annual fees.

These enticements are called “retention bonuses,” and no rewards maximizer would cancel a card before seeing if the bank will offer one. credit card rewards

“Learning about retention bonuses is a very powerful way for people to get more from their cards,” says Shawn Coomer, managing editor of the rewards blog Miles to Memories.

How to harness the power of retention bonuses will depend on the kind of card you’re thinking of canceling — and on your circumstances.

Common types of retention bonuses

Retention bonuses are as various as the number of cards out there, but they generally fall into two major categories.

  1. Statement credit: The issuer may literally pay you to keep your card – in the form of a statement credit. While most issuers won’t agree to officially waive the annual fee, Coomer says, the statement credit may very well be equal to the annual fee.

    Sometimes, the credit offered may even be more than the annual fee, says Ralph Liberatoscioli, founder of PointsCentric, a rewards and travel-consulting website. But there might be strings attached.

    “For example, you might have to spend $500 in three months,” Liberatoscioli says. “But if you do that, you actually make a little money.”

  2. Rewards boost: Instead of a straight-up statement credit, the issuer may dangle another carrot – extra rewards. You might be offered extra rewards per dollar spent for a specific period of time. Or you might be offered a bolus of a few thousand miles. As with the statement credit, though, a rewards-boost retention offer may have spending requirements attached. For example, you may have to spend $500 in three months to get 3,000 extra miles.

Which type is better depends on your preferences.

“Someone who likes to travel might get more value out of miles than cash,” Liberatoscioli says, noting that, if you’re a couple thousand miles shy of a free first-class international flight, a quick infusion of 3,000 miles could get you a ticket worth thousands of dollars.

“But if someone travels just once or twice a year, they might value a $100 credit more,” he says. “That could go toward household expenses instead of more miles they won’t use right away.”

These days, statement credits are becoming rarer, Coomer says. You’re more likely to see rewards boosts with spending requirements.

“They want to get you engaged with the card, get you using that card, get that card in your wallet,” Coomer says. “They want you to see the value of keeping that card and paying the annual fee if it has one, so they want you to have the experience of using it and earning more points.”

Making the call

Generally, the retention-bonus conversation will take place over the phone. The secure-message box on your issuer’s website will be more efficient if you’re positive you want to cancel. But the agents manning the chat box usually don’t have the ability to offer retention bonuses, Liberatoscioli says.

When the customer service rep picks up, be pleasant, Liberatoscioli suggests.

“Try to build a little rapport with them,” he says. “They deal with people all day, and sometimes when people call to cancel, they’re angry. You want to get on their side and be that friendly person.”

Then, get to the point and tell them you’re calling to cancel your card. The agent might ask you why, in which case you can explain your reasons – you don’t want to pay the annual fee, for example, or you’re not flying the affiliated airline as much. The agent might then make you an offer or transfer you to a retention specialist, Liberatoscioli says.

The reasons you give for cancelling are important, because the retention bonuses offered may correspond to them.

“If it’s about the rewards, they might give you extra points per dollar for a period of time,” Coomer says. “If it’s about the fee, they might give you some kind of credit.”

Issuers take other data into account as well, including your credit profile and the value of your banking relationship. If you spend a lot on the card, or on another card with that issuer, the issuer may fight harder to keep you, Coomer says, because it’s making money with every charge (via interchange fees).

Some agents might jump the gun and start the cancellation process immediately. However, they’re required to read a laundry list of disclosures before they actually close the card, so you should have plenty of time to say you’d be willing to consider keeping the card if there are any retention offers available, Liberatoscioli says.

If you get an agent who doesn’t seem interested in working with you, Liberatoscioli suggests hanging up and trying again.

“Some agents really want to work with you, while others just want to get through the call as quickly as possible,” he says.

Some banks are also more accommodating than others. Citi, for example, will generally check if you have any retention offers available on your other Citi cards, in addition to the card you called to cancel, Coomer has found.

“They’ll have a list of the cards you have and go from card to card and tell you the offers you have available,” Coomer says. “Usually, you have to call individually for every card.”

Weighing the offer

Once offers start getting thrown down, you may need to do some quick thinking.

“The first offer may not be the best, so it’s worth it to see how far you can get,” Coomer says.

So how do you know if you’ve landed on a good offer? It helps to determine the following before the call:

  • What others have been offered: Successful bonus-fishers often share their retention success stories on rewards forums. There’s no guarantee you’ll be eligible for the same bonuses, but at least you’ll know what’s out there, Coomer says.
  • How much a card’s rewards are worth: If you’re offered a statement credit, the math is easy – the value is equal to amount of the credit. Travel rewards are more complicated, though, as miles and points earned by different cards are like different currencies.

    “Five thousand American Airline miles is different from 5,000 Starwood points,” Liberatoscioli says.

    So, while several thousand miles may seem like a lot when the rep offers it, it may not be. If you need to do the math quickly, you can value each mile or point at a penny (so 5,000 miles would be worth roughly $50), Liberatoscioli says. Depending on how you redeem, though, they could be much less or much more. Read our in-depth article about calculating the value of your rewards.

  • How much YOU want: After calculating the value of your rewards, go into the call knowing how much you’re willing to settle for to keep the card. If you want to cancel out your annual fee, for example, you’d need a statement credit (or rewards miles) worth the same amount. If you’re trying to get a free flight, know how many more miles you need to do so.

    “I go into a call knowing what value I want to get, whether it’s from points or credits,” Coomer says.

Making a decision

After weighing the offer, you have to decide – keep it or close it? If you know what you want going in, and the issuer won’t give it to you, it might be time to close the card.

… but not always. Think about what else you use the card for. Some cards have perks you’d otherwise have to pay for, meaning the card could be saving you money, even if it has an annual fee. Airline cards often waive checked-bag fees, for example. The Citi Hilton HHonors Reserve card, meanwhile, provides free breakfast at some properties for you and another guest.

“Even if you don’t do anything else with that card, free breakfast alone might save you a few hundred dollars throughout the year on your trips,” Liberatoscioli says. “If you’re trying to get that retention bonus and they just won’t give it to you, don’t assume it’s automatically a card to close. It could still be worthwhile.”

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