Should I Downgrade My Capital One Venture To A No Annual Fee Or Get A New, Better Card?
Update: Some offers mentioned below are no longer available. View the current offers here.
TPG reader Dan emailed me with a credit card quandary this week:
"I enjoy reading your blog and I had a quick question. I currently have a great credit score (780+) and have 2 credit cards. I have the Capital One Venture and the Barclaycard US Airways Mastercard ( I live in Philly and have Preferred status on US). I tried getting the annual fee waived for the Capital One card, and it was a no go. They said they could change my card to the VentureOne that earns 1.25 miles per dollar spent with no annual fee. I'm considering doing this to keep my credit score intact because Capital One is my oldest card open. Do you think it would be a good idea to change my card to the no annual fee Capital One card and getting something like the Chase Sapphire Preferred? I'd get the attractive sign up bonus and get 7% point bonus and travel discounts etc."
Dan has the right idea - it's time for a wallet revamp! If I were him, I would downgrade my Capital One Venture card, which has a $59 annual fee, to the no-fee VentureOne card to keep your line of credit open and your credit history intact. That's because your credit history accounts for 10% of your FICO score, so keeping an account open with Capital One will be beneficial. Yes, the VentureOne only earns 1.25 miles per $1 as opposed to the Venture's 2 miles per $1, but there are actually better credit card offers out there that you should consider instead.
If you want an even better return than the Venture, get the Barclaycard Arrival. Its $89 annual fee is waived the first year, and the sign-up bonus of 40,000 miles when you spend $3,000 in 3 months is worth $440 toward travel. You earn 2x miles per $1 on all purchases and can redeem those miles at 1 cent apiece toward travel purchases plus get a 10% mileage refund on travel redemptions, giving you a 2.2% return on spending. For more information and a comparison of how the Venture and Arrival stack up, as well as other fixed-value points, check out this post: Maximizing Fixed-Value Points.
While you're applying, you should also consider getting Sapphire Preferred or the Ink Bold or Ink Plus to build up and diversify your points portfolio. Right now you have no transferable points, so you definitely want to start maximizing other programs that will give you more flexibility with redemptions - especially if you ever consider premium travel where transferable points and their travel partners can come in handy. Plus remember that Ultimate Rewards points earned with these three specific cards can be redeemed for Pay With Points at 1.25 cents apiece towards travel - and all have category spending bonuses (2x on travel and dining with Sapphire Preferred, 5x on office stores and telecommunications and 2x on hotels and gas with the Ink cards), so even if you used this fixed-value redemption system, you are still potentially getting a better rate of return on your spending that can be worth as much as 6.25% if you max out those Ink 5x categories.
Since these cards are issued by other banks, you should be able to get a Barclaycard and a Chase card on the same day with no issue since you have such a strong credit score and relatively few cards.
Have any other questions? Let me know by messaging me on Facebook, tweeting me or emailing me at firstname.lastname@example.org.