Are Credit Card Retention Bonus Offers Worthwhile?
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TPG reader Aaron sent me a message on Facebook to ask about credit card retention offers:
“What are your thoughts on the bonuses card companies offer to keep you from closing an account? I called to cancel my AAdvantage Gold card and was offered my choice of a waived annual fee ($50), 3,000 miles or two Admirals Club vouchers.”
Card issuers want you to use their products, which is why they offer not only lucrative sign-up bonuses to get you to apply, but also retention bonuses to keep your business if you’re thinking about closing your account. Whether you’re on the fence about paying an annual fee or just weeding out cards that don’t provide enough value, calling to inquire about retention offers is definitely one of the steps you should take before canceling a card.
Retention bonuses come in a variety of shapes and sizes. Usually you’ll receive points/miles or a statement credit, but you might also be offered perks like lounge passes, elite-qualifying miles or certificates for a free hotel night. Which one you should go for depends on your own preferences and travel plans. I use my monthly valuations to help me decide between points or cash, but I might forego those options for some other benefit that better suits my needs (like stay or night credits when I’m trying to requalify for hotel elite status).
Aaron’s three choices are worth roughly the same amount (to offset the $50 annual fee), and none of them require any further action on his part, so there’s little reason not to go for it. However, some retention offers function more like a sign-up bonus, so you have to spend a certain amount over a set time period. You might also be given several options with different values, like 3,000 points after spending $500 or 10,000 points after spending $1,500. Generally, I’d go for the biggest offer you think you can earn without overextending yourself financially.
My experience has been that Citi is the most likely to offer a retention bonus but that Chase and Amex tend to offer the best incentives (when they offer anything at all). Your experience will depend a lot on your level of business with the card issuer: You’re more likely to receive an offer if you’re a long-time cardholder and you use your card regularly, or if you also have a banking relationship.
If you think your offer doesn’t match your value as a customer, don’t be shy about politely stating your case. Bonuses are often pre-loaded, so the agent you speak to might not have the authority to offer you more. In that case, try speaking with a supervisor who may have access to more information about your account and should be better able to accommodate you. As I often say, it doesn’t hurt to ask.
For more info about canceling a credit card, check out these posts:
- Should I Cancel a Credit Card if I Don’t Use it Anymore?
- Which Annual Credit Card Bonuses Justify the Annual Fee?
- Strategies for Minimizing Credit Card Annual Fees
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