Credit card churning, the practice of signing up for multiple credit cards to take advantage of lucrative sign-up bonuses, can be a highly rewarding strategy. However, many of the cards with the best rewards come with hefty annual fees, which can quickly add up and reduce the overall value of the benefits you’re earning. Fortunately, there are several strategies you can use to avoid or minimize these fees while credit card churning. Here’s how to make the most of your churning experience without breaking the bank.
1. Cancel the Card Before the Annual Fee is Charged
One of the most straightforward ways to avoid paying an annual fee is to cancel the credit card before the fee is due. Most credit card issuers charge the annual fee on the anniversary of when the card was opened. If you’ve already earned the sign-up bonus and utilized any benefits, you can choose to cancel the card before the fee posts.
However, it’s important to note that canceling a card may impact your credit score by reducing your total available credit and possibly affecting your credit history. To minimize any potential negative effects, consider whether you have other cards with similar credit limits to maintain your overall credit utilization ratio.
If you want to learn more about churning in general we highly recommend the following posts / websites:
Best Sign-Up Bonuses for Credit Card Churning
how to avoid annual fees credit card churning
Best practices for credit card churning
2. Downgrade to a No-Fee Version
Another effective way to avoid annual fees is to downgrade the card to a no-fee version before the fee is due. Many issuers offer similar cards without annual fees, allowing you to keep your account open without paying for premium benefits you may no longer need. For instance, you could downgrade a Chase Sapphire Preferred® to a Chase Freedom Unlimited® or an American Express® Gold Card to an Amex EveryDay® card.
This strategy allows you to preserve the length of your credit history, which can positively impact your credit score, while still avoiding the cost of the annual fee.
3. Request a Retention Offer
Credit card issuers don’t want to lose customers, especially those who have shown a pattern of responsible spending. If you’re approaching the annual fee renewal date and are considering closing the card, call the card issuer and ask for a retention offer. In many cases, issuers may offer a statement credit, bonus points, or a waived annual fee to keep you as a customer.
It’s important to be polite and explain why you’re considering canceling the card. Mention that you don’t see enough ongoing value to justify the fee. Sometimes, issuers will offer to offset the fee or provide other incentives, making it worthwhile to keep the card for another year.
4. Time Your Cancellations Carefully
If you decide to cancel a card to avoid the annual fee, make sure to time it strategically. Most credit card issuers have a grace period—usually around 30 to 60 days after the annual fee posts—during which you can still get the fee refunded if you cancel the card. This gives you some flexibility to use any remaining rewards or perks before canceling.
5. Use the Benefits to Offset the Fee
Sometimes, the annual fee is worth paying if the card’s benefits outweigh the cost. For example, travel credit cards may offer perks like airport lounge access, travel credits, or complimentary hotel stays, which can justify the fee. Before canceling, make sure to evaluate whether the card’s benefits provide more value than the fee itself. If so, consider keeping the card for another year.
6. Product Change Instead of Cancelling
If you are not ready to cancel or downgrade the card to a no-fee version, consider a product change. This involves switching your current card to a different card from the same issuer that better suits your needs. This may come with a different annual fee, potentially lower than your current card, and can still allow you to keep your credit line open.
Conclusion
Avoiding annual fees while credit card churning is possible with the right approach. By strategically timing cancellations, downgrading cards, requesting retention offers, and maximizing the card’s benefits, you can keep costs low and make the most of your churning strategy. These practices not only help you avoid unnecessary fees but also allow you to continue reaping the rewards without compromising your credit score.