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The Insider Strategy That Makes Getting a Travel Credit Card With an Annual Fee a Totally Safe Bet

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The Insider Strategy That Makes Getting a Travel Credit Card With an Annual Fee a Totally Safe Bet

Scott LiebermanThe Insider Strategy That Makes Getting a Travel Credit Card With an Annual Fee a Totally Safe BetMillion Mile Secrets Team

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I admit it.  When I started in the travel credit card hobby, I stubbornly refused to get credit cards with an annual fee.  But I finally realized that some annual fees are totally worth it when you actually do the math.  At the same time, I learned there’s an escape plan that does NOT involve you completely canceling the card.

This tactic applies to popular travel credit cards such as:

Life Is Easy When You When You Use Travel Credit Card Points Instead of Money.  It’s How I Take Flights and Stay at Luxury Hotels Like This One in Europe

The No-Risk Strategy for Opening a Travel Credit Card

This method applies for more than the 5 credit cards I’ll be talking about here, but these are some of the more popular cards with our readers (and our staff!).

It’s simple.  Certain credit cards have a no annual fee version of the same card.  Sometimes they advertise all about that version.  But sometimes they don’t.  Also, some credit card companies allow you “downgrade” your annual fee card to a different card in their collection.

There are a couple of advantages to downgrading a credit card instead of closing it outright.

1.   Closing a credit card might impact your credit score a bit.  It depends on your situation, but in general, you want to be using a small percentage of the actual credit you’re given.  This is actually one of the unexpected benefits of having lots of credit cards that you pay in full!

My credit score is higher than when I started this hobby (I now have 20+ cards) in part because I have a ton of credit I can use, but don’t use.

2.   Probably more important to most of you reading an article about travel credit cards is that downgrading can be a way to save your points.  When you cancel a card you often shred your hard-earned points.  By downgrading instead, you can keep them on a different, but related, card.

Example 1:   Chase Sapphire Preferred® Card 

I love my Chase Sapphire Preferred — I use it all the time.  Two tactics make it a no-brainer to try out for yourself.

1.   It has $0 annual fee in year one with the card.  So if for some reason you don’t use it like you thought, it costs nothing.  The annual fee doesn’t kick in until year two.

I’ve paid it over and over because this card has enabled me to fly Business Class round-trip to Europe using points instead of dollars, book luxury all-inclusive hotel suites on the beach, etc.  Anyhow, let’s say you decide for whatever reason you don’t want it anymore.

2.   Then instead of closing the card, you could just ask Chase to switch you to a no annual fee card in their collection.

For instance, there’s a no annual fee flavor of Sapphire that you can’t apply for but can “downgrade” into.  Or you can switch to the no annual fee Chase Freedom credit card.  You generally can’t switch to just whatever Chase credit card you want — they’ll give you choices.

What’s cool is you’ll keep all the Chase Ultimate Rewards points you earned.  But of course you’d no longer have the Chase Sapphire Preferred benefits.

The Chase Sapphire Preferred® Card is the most important travel credit card in my collection. 

And I always recommend it to family, friends, and anyone who wants to get started in the miles and points hobby in a no-risk way.  

The sign-up bonus is 50,000 Chase Ultimate Rewards points after you spend $4,000 on purchases in the first 3 months from account opening.

Using our tricks and tips you can flip that into $1,000+ worth of flights or hotel stays.  It’s pretty easy.

Worst case, you can use 50,000 Chase points on their Chase travel site (it’s like Expedia) to get $625 worth of airfare, hotels, car rentals, etc.

Worst-worst case — cash in the 50,000 points for $500.

Again, Chase Sapphire Preferred® Card has $0 annual fee in year one.  So as I see it, it’s all upside to add it to your collection.

I will say though (as with all credit cards) be sure to pay your bills on time and in full!  If you feel you can do that, you’re good to go.

Example 2:    Ink Business Preferred Credit Card – Earn 80,000 Chase Ultimate Rewards points after you spend $5,000 on purchases in the first 3 months from account opening.

This card has an annual fee but as you can see from the generous bonus, it’s worth it.  Worst case is you turn 80,000 Chase points into $800 cash minus the $95 annual fee and you’re still ahead of $700.  But if you use our Million Mile secrets, you’ll easily turn 80,000 Chase Ultimate Rewards points into travel such as:

  • 3 round-trip flights in the US
  • 3 nights at an amazing Hyatt hotel, even their Caribbean beachfront all-inclusive resorts (I love doing this)
  • One-way Business Class flight to Europe (I used Chase points this way.  Awesome.)
  • $1,200 worth of flights on Southwest Airlines (remember you also get 2 free checked bags)

And much more!

This is a small business credit card and you can qualify by applying with your security number as a sole proprietor of a for-profit business.  That’s how I’ve been approved for Chase business credit cards.  Keith on our team loves his Ink Business Preferred Credit Card so much, he just got a 2nd one!

The Escape Plan:   So let’s say you decide in year two that you’re not into the hobby or whatever and you don’t even want to use 3X points categories for cash back.

Ask Chase to “downgrade” your Ink Business Preferred Credit Card to a no annual fee business credit card such as their Ink Business Unlimited Credit Card or Ink Business Cash Credit Card.  Your points will move to the new card. 

I have both of those cards and I use them all the time.

Example 3:   Capital One® Savor® Cash Rewards Credit Card – $300 cash bonus after you spend $3,000 on purchases within the first 3 months of account opening.  This is the cash back credit card I want next.   

Technically it’s not really a travel credit card but for me, I’d use it that way because it has no foreign transaction fees.  And I dine out a lot and spend on entertainment while traveling, so I’d like to earn 4% cash back on those expenses with Savor.

Savor has $0 annual fee in year one.  But say you don’t want to pay the annual fee in year two.  Instead of canceling, ask if you can change to the no annual fee Capital One SavorOne Cash Rewards Credit Card version of the card instead.  Now, from my research, it seems like Capital One will sometimes let you do this move but sometimes they won’t.

Savor’s $300 bonus basically pays for the annual fee for 6 years ($0 annual fee in year one + $95 a year for 5 more years) so most people who actually use the generous cash back categories:

  • 4% cash back on dining (most bars and nightclubs code as dining too)
  • 4% cash back on entertainment (concerts, tourist attractions, theme parks, etc.)
  • 2% cash back at grocery stores

will be keeping it.  But if you feel like you just don’t want the card any longer, it’s sometimes possible to switch it to the no annual fee version.

Example 4:   Capital One® Venture® Rewards Credit Card – 50,000 Venture miles after you spend $3,000 on purchases within the first 3 months from account opening.  So that’ll cover $500 worth of travel expenses.

Same deal as with the Savor.  Venture has a little-discussed flavor called VentureOne.  The no annual fee Capital One® VentureOne® Rewards Credit Card still has the great Hotels.com promotion but it’s weaker in most other ways.

Again, Capital One doesn’t seem to be super consistent in their downgrade policies from what I’ve seen and I haven’t actually downgraded a Capital One card myself.  I do have the no annual fee Capital One® Quicksilver® Cash Rewards Credit Card that I got before I really got into the travel credit card hobby.  And that might be another downgrade option.

Sometimes it just takes giving the human being you’re speaking with a valid reason you want to switch cards.  The banks want you to actually use your credit card.  So if downgrading will get you to use the card a lot more, that could make good sense for both you and the bank.

For many folks though, Capital One® Venture® Rewards Credit Card is a great deal.  On top of the sign-up bonus that’s worth $500, and no annual fee in year one, you get:

  • 2 Venture miles per $1 you spend on all purchases
  • Statement credit for Global Entry or TSA PreCheck (This can save you $100 right there.)
  • 10 Venture miles per $1 you spend on hotel stays booked and paid for with your card through their special Hotels.com promotional link through January 31, 2020
  • No foreign transaction fees

Last Example:   Hilton Honors American Express Ascend Card – 125,000 Hilton points after spending $2,000 on purchases within the first 3 months of account opening.  There’s a $95 annual fee (See Rates & Fees).

You should generally come out way ahead though if you use your Hilton points for free stays.

But say you have personal reasons for wanting to get rid of the annual fee and you no longer need the complimentary Hilton Gold elite status, etc.  You can ask American Express to downgrade you to the

Hilton Honors American Express Card  – I have this no annual fee card. (See Rates & Fees)

Bottom Line

Instead of canceling a credit card that you didn’t use as much as you thought, first ask the bank if they’ll downgrade you to a similar no annual fee card.  Verify with the person you speak with or email with, but it…

  • Should NOT be a credit pull
  • Should save all the points you’ve earned
  • Is a way to keep your line of credit.  And that contributes to a higher credit score.

This option might give you extra peace of mind when considering the incredible perks and points bonuses from top travel credit cards like:

For rates and fees of the Hilton Ascend Card, please click here.
For rates and fees of the Hilton Amex Card, please click here.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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The guy on the twitter post is cute so I clicked on the link but he doesn’t appear to be here.