Discontinued Credit Cards: Why or Why Not Stick With Them
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Just as issuers launch new credit cards on a regular basis — like the Chase Sapphire Reserve, which came into being back in 2016 — financial institutions also discontinue credit cards fairly frequently.
This can happen for a number of reasons. Sometimes, an airline or hotel group switches relationships from one bank to another. For example, JetBlue ended its partnership with American Express in favor of forging a new one with Barclaycard in 2016 that included the introduction of the JetBlue Card, the JetBlue Plus Card and the JetBlue Business Card.
Some programs have multiple bank partnerships and eventually decide to consolidate their credit cards with one or the other. That was the case with Hilton Honors, which, after years of partnering with both Citi and Amex, decided to end its Citi relationship and offer cards solely through American Express starting this month.
Still more discontinuations occur because of mergers or other developments, which is what happened when American Airlines and US Airways merged and the US Airways card offered through Barclaycard was converted into the Aviator family of cards that are still around now and earn American AAdvantage miles. We’re still waiting to see what credit cards Marriott and Starwood Preferred Guest will offer as their merger proceeds. Thanks to Alaska Airlines’ takeover of Virgin America, Virgin’s co-branded Comenity cards were all just closed on January 4.
This phenomenon isn’t limited to travel programs, though. Costco ended its long-running relationship with American Express in 2016 in favor of the new Citi-branded Costco Anywhere Visa Card by Citi, with different benefits and earning rates.
Many cards that are discontinued end up being “converted” into other products from the same issuer. With the Fairmont Visa Signature from Chase, for example, most cardholders were automatically sent new Chase Sapphire Preferred cards.
While many credit cards end up discontinued altogether, and their cardholders are either given a different card from the same issuer, some of discontinued cards endure but are just not open to new applications. Those include Chase’s United MileagePlus Select and Presidential Plus cards, whose cardholders are “grandfathered in” and can continue to use these cards.
Factors to Consider About Keeping a Card Open
If you have a credit card that no longer accepts new applications, you’re probably asking yourself whether or not it pays to continue to keep it. Your decision will likely be based on several elements, including the card’s annual fee, its benefits and how they might have changed, and what opportunities you might have to convert your card into another one. Here are the major factors you need to consider.
The impact on your credit score: Your credit score is calculated based on five major components: your payment history, the amounts owed, length of credit history, new credit and types of credit used.
Closing a credit card impacts your credit history, which accounts for 15% of your credit score. However, it also alters your credit to utilization ratio, which is weighted at 30% of your credit score. That’s the amount you owe versus your total line of credit. Since you will have a smaller line of credit after canceling a card, assuming your spending stays the same, your utilization ratio will rise and could thus bring down your credit score.
Canceling a card therefore directly influences the two factors that account for nearly half of how your credit score is calculated. Take a look at where the card you’re thinking of canceling falls into the history of your credit portfolio, and how big its line of credit is compared to your overall credit limit. Then consider if a card cancellation will make a big impact on your credit score before proceeding.
Annual fee: Of course, one of the major considerations with any credit card, active or discontinued, is whether it has an annual fee. If it does, you need to consider whether it makes sense to keep paying for the card. Are you maximizing its benefits, such as an anniversary points bonus or free night, or airport club access? What else does it have going in its favor that offsets the cost of paying for it each year you keep it in your wallet?
For example, the United MileagePlus Presidential Plus Card costs $450 per year, but comes with United Club access, much like the Chase United MileagePlus Club Card does, which equates to $450-$550 in value per year. It also waives close-in award booking fees that can save cardholders $75 per instance, which is the equivalent of a United Premier Platinum status benefit.
Conversion to another card: If your card was recently discontinued, or is about to be, is the issuer going to automatically convert your card into another product? That’s the case with the Fairmont Visa from Chase, whose cardholders will automatically be sent new Sapphire Preferred cards.
But if you did not already have the Sapphire Preferred and you have not crossed Chase’s 5/24 rule capping the number of cards you can apply for in a given amount of time, you might want to apply for the new Sapphire Preferred card before, since “converted” cards are generally not eligible for sign-up bonuses, whereas new credit card applications are. By simply converting, you could be giving up a sign-up bonus worth tens of thousands of points.
Upgrading or downgrading opportunities: If your discontinued card is being converted into another card, look at what your options might be, especially if you do not want to continue paying an annual fee on yet another credit card.
In the Fairmont/Sapphire Preferred example above, you’re swapping one card with a $95 annual fee for another. But if you’re not sure you want to take that on, or if you already have the Sapphire Preferred or another Ultimate Rewards-earning card, you might want to check with Chase and see if you will be able to downgrade your new card to one with no annual fee, like the Chase Freedom Unlimited. That way, you maintain an uninterrupted credit line and history, but do not have to pay yet another annual fee to do so. The information for the Chase Freedom Unlimited card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Likewise, many US Airways Mastercard cardholders were automatically given AAdvantage Aviator cards from Barclaycard whose benefits were quite similar to those of comparable Citi / AAdvantage cards. But why pay the annual fees for two cards that essentially offer you the same benefits if you’re not going to be able to maximize both?
Unused benefits: Does your discontinued card come with a time-sensitive perk like an annual free night or conversion benefit from regular airline miles to elite-qualifying miles? If so, check the fine print in your benefits guide and be sure to use any benefit that requires your card to be open and in good standing before canceling the card so that you don’t miss out.
Likewise, if you earned such a benefit with a discontinued card that has been converted into another card by the issuer or loyalty program, as is happening with the Citi Hilton cards, you will likely still be able to use a benefit such as the Citi Hilton Honors Reserve’s sign-up bonus of two free weekend nights (if you haven’t used them yet), within a set time period post-discontinuation. Make sure you do so, or that perk might be lost and gone forever.
Benefits not available through other cards: One of the best reasons to keep a discontinued card is that it might offer perks you will not find on newer versions. This is where the United MileagePlus Select and Presidential Plus cards really shine, and are set apart from some of the other United credit cards Chase currently has open to applications — namely the United MileagePlus Explorer Card and the United MileagePlus Club Card.
The United MileagePlus Select version, for example, earns 3x miles per dollar spent on United tickets; 2x miles per dollar spent at restaurants, grocery stores and home improvement stores; 2x miles per dollar on tickets purchased from other Star Alliance carriers; and 1 mile per dollar on everything else. Those earning ratios are much more lucrative than the current United cards’, and might be worth holding onto the card alone if you spend a lot on purchases in those categories. Cardholders can also earn up to 5,000 Premier-Qualifying Miles (PQMs) on purchase made on united.com and earn 5,000 bonus miles on the account anniversary each year.
With the United MileagePlus Presidential Plus Card, meanwhile, cardholders earn 2x miles per dollar on tickets purchased from United, but also on hotel accommodations purchased directly with the hotel and at car rental agencies, plus 1x mile per dollar on everything else. (The business version earns 2x on United tickets as well as restaurants, gas stations and office supply stores). The card also confers the opportunity for upgrades on award tickets for Premier members and waives close-in award booking fees, not to mention perks already discussed like United Club access, plus the usual slate of perks like free checked bags.
However, its other unique standout benefit has to be the fact that cardholders can earn 1,000 Flexible Premier Qualifying Miles for each $5,000 spent on the card. Flex PQMs earned on or after January 1, 2012, are active for the calendar year in which you earn them plus an additional 39 months (those earned before then do not expire) and can be combined with the regular PQMs you earn when you fly to help cardholders earn or maintain elite status. The benefit is pretty unique among airline cards and makes it one of the best cards that help you earn elite status through spending, which the Explorer and Club cards do not.
The two Diners Club cards — the Premier and the Elite — are not available for new applications, but are still out there and also have some great benefits including Diners Club airport lounge access at over 700 locations. The Elite version also earns 3 points per dollar at gas stations, grocery stores and drugstores. The points you earn on either are transferable to 14 different airlines including Air Canada, Delta, Korean Air, British Airways, Alaska Airlines and Southwest, not to mention Hilton, Marriott and Starwood Preferred Guest, among other loyalty programs. That’s a combination of partners you won’t find elsewhere and that might make the cards’ $95 (Premier) and $300 (Elite) annual fees worth it to you.
If you have a card that has been or will be discontinued, you’ve got a decision to make: Do you keep it or cancel it? When weighing your choices, remember to consider the impact that canceling the card will have on your overall credit score, and if the benefits of keeping it outweigh the cost of the annual fee.
Take the time to learn whether your card will be discontinued altogether, or whether it will be converted into another credit card product. If it will be converted, think about whether the new card makes sense for your needs, both in terms of earning points and the benefits it will give you. Finally, come up with a list of the perks offered by your card that might not be available on newer versions, and whether you are maximizing them. Once you take all those factors into consideration, it should be pretty clear whether you should keep the card or see what newer products are available that might better suit your travel needs.
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