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The one thing that people most frequently get hung up about when it comes to travel reward credit cards is the annual fee. It is hard to find a travel rewards credit card that comes with plenty of benefits that also doesn’t charge $95-$650 per year for the privilege of earning points and miles. If it doesn’t, the perks and points are often less than impressive.
Sure, some companies offer to waive the annual fee for the first year, but after that, is it worth paying the price? And yes, there are no annual fee credit cards that are pretty good, but are they worth having? With annual fee cards, are the rewards worth the cost? We’ll help you figure out if you should cancel or downgrade your credit card.
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Popular Annual Fee Travel Reward Cards
Most of the most lucrative travel rewards cards come with an annual fee. The Chase Sapphire Preferred® Card is $95 per year. The Capital One Venture Rewards Credit Card is also $95 a year. Neither card charges a foreign transaction fee.
Airline credit cards also offer generous sign-on bonuses. Plus, fees are typically waived in the first year.
No Annual Fee Reward Cards
If you don’t want a reward card with a fee or are planning to cancel or downgrade your credit card that carries a high annual fee, there are a few cards to choose from.
Capital One VentureOne Rewards Credit Card
The Capital One VentureOne card is one of them. The rewards aren’t as good as the Capital One Venture Rewards Credit Card, but it still comes with its own set of unique benefits. It offers 1.25x miles per dollar spent.
New Capital One VentureOne Rewards Credit Card cardholders can earn 20,000 bonus miles after spending $500 on purchases within 3 months from account opening, equal to $200 in travel.
This is equal to $200 in travel. You won’t get that bonus if you are downgrading from the Venture card, but it is available to new cardholders. However, the Capital One VentureOne Rewards Credit Card is still worthwhile. Plus, cardholders can transfer miles to over 15+ leading travel loyalty programs, including new Capital One hotel transfer partners.
Related: How Much Are 20k Miles Worth? Best Ways To Redeem 20,000 Miles
Chase Freedom Cards
The information for the Chase Freedom Flex℠ has been collected independently by Johnny Jet. The card details on this page have not been reviewed or provided by the card issuer.
The Chase Freedom Flex℠ card and Chase Freedom Unlimited® card are a couple more.
The Chase Freedom Flex earns:
- 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate (then 1% back)
- 5% cash back on travel purchased through Chase Ultimate Rewards®
- 3% cash back on dining at restaurants, including takeout and eligible delivery services
- 3% cash back on drugstore purchases
- 1% on all other purchases
New Freedom Flex cardholders can earn a $200 bonus after spending $500 on purchases in the first 3 months from account opening.
The Chase Freedom Unlimited earns:
- 5% cash back on travel purchased through Chase Ultimate Rewards®
- 3% cash back on dining at restaurants, including takeout and eligible delivery services
- 3% cash back on drugstore purchases
- 1.5% cash back on all other purchases
New Chase Freedom Unlimited® cardholders can enjoy unlimited matched cash back! Use the card for all purchases and at the end of the first year, Chase will automatically match all the cash back earned! There is no limit to how much can be earned. Every dollar in cash back rewards earned is a dollar Chase will match.
There is no limit to how much cash back can be earned. Both cards do charge a foreign transaction fee but no annual fee. Learn more in our Freedom Flex and Freedom Unlimited comparison.
To Cancel or Downgrade Your Credit Card
If you are considering whether to cancel or downgrade your credit card, keep these facts in mind:
- You may lose any unused points
- Your credit score might suffer if you don’t have many long-standing credit cards in your name
- You likely won’t be able to sign up for that card again for 2 years or more
- You lose any benefits that come with the credit card
For example, in order to use some rewards points, you have to charge purchases to the credit card in order to redeem them. No credit card means no access to points. When you cancel other cards, like ones that earn Chase Ultimate Rewards, Citi ThankYou Points, and Membership Rewards, you run the risk of losing access to those platforms entirely.
As for your credit score, if you have many cards that you’ve had for years, canceling one or two won’t make your score take a dive. But if you regularly open and cancel accounts after only a year, your score could take a hit.
If you signed up for a credit card because of specific benefits, like no foreign transaction fees or free checked baggage, canceling will negate those perks.
Downgrade Your Credit Cards If Possible
The best option and one that bypasses most of the above concerns is to downgrade your card to a no-fee option instead of canceling. Downgrading allows you to:
- Hang on to your points
- Eliminate an annual fee
- Keep your credit score intact
- Retain access to the valuable point and redemption systems
- Retain some card benefits
For example, downgrading your Chase Sapphire Preferred to a Chase Freedom or Freedom Unlimited allows you to continue collecting valuable Chase Ultimate Rewards® points. Switching from the Capital One Venture Rewards Credit Card to the Capital One VentureOne Rewards Credit Card means no more annual fee. But you still have access to the easy-to-use purchase eraser.
Some downgraded cards even come with similar benefits as their more expensive siblings, like no foreign transaction fees and trip insurance. However, more often than not, point-per-dollar values will weaken with the no-fee cards. But they will help keep your credit score strong and healthy as downgrading doesn’t show up as a cancellation.
Considerations
Do keep in mind that, typically, you won’t get whatever welcome bonus the downgraded card is offering. But it will go a long way in padding your credit score so when you apply for the next travel reward card with a tempting bonus, your credit score won’t take such a hit.
Just keep an eye out for policy changes like foreign transaction fees or foreign exchange fees so you know what to expect if you plan on using the card while traveling in other countries.
The Bottom Line on Canceling or Downgrading a Credit Card
Basically, if you’re wondering whether you should cancel or downgrade your credit card, keep these things in mind:
- Will canceling hurt my credit score?
- Will I lose my points and miles if I cancel?
- Also, will I be able to get that credit card again if I change my mind?
- Do I still want access to my card’s specific perks and benefits?
Generally speaking, downgrading to a no annual fee card is almost always a smarter move if you’re considering whether to cancel or downgrade your credit card. It’s a great way to keep the points adding up and keep your account history.
