This post is part of a series that will detail verbatim my negotiations with credit card companies to squeeze every last point and cent out of my cards.
Last August, I opened both the Citi AAdvantage Visa and Citi AAdvantage Amex at the same time to earn 150,000 American Airlines miles. The Visa had a spending requirement of $1,500 within four months to unlock its 75,000-mile bonus. After hitting that bonus, I moved on to unlocking the Amex’s bonus then on to other cards. I haven’t made a purchase or payment on the Citi AA Visa since last September.
Today, about three months before the $85 annual fee is due, I followed my standard procedure of calling up to extract a retention bonus, which I described in this post. Why do I call three months before the annual fee is due? It’s close enough to the fee’s date that I can tell them I’m calling to cancel my card because of the impending fee. But it’s also far enough in advance that I can accept a retention bonus challenge, complete the challenge, see the statement credit or points post, and still close the card before the annual fee if I don’t think I want it going forward.
When I called, I gave my security info to access my account. When the representative asked why I was calling, I said, “I’m calling in because the annual fee is coming up, and I can’t justify paying the annual fee, so I want to close the account.”
She responded, “We’ll get you over to a representative about closing the account.” I was put on hold for about a minute. So far this is standard procedure. Instead of asking about a retention bonus, I just said I wanted to close the card, knowing I would be offered one.
When the new representative from the retention department came on, we made small talk about the weather in California, South Dakota, and Florida for thirty seconds. Being polite probably doesn’t help unlock a better offer, but it certainly does not hurt.
I repeated my line. “I’m calling in because the annual fee is coming up, and I can’t justify paying the annual fee, so I want to close the account.”
She noted that I had not used the card very much. (An understatement since I haven’t used it in eight months.) I responded by saying, “At first, I was using it and enjoying the benefits. But I found that the transferable points programs offered by Chase and American Express better meet my needs.”
At this point, she started to talk about the benefits of the card. They often do this to see if you’ll stick with it without a retention bonus or at least to soften you up. She mentioned the free checked bag on AA if you use the card to buy the ticket. This is worth $25 each way, but I almost never check a bag. She mentioned priority boarding, though I prefer to board last usually, and she mentioned the 25% inflight savings on AA purchases. Twenty-five percent off AA food in coach is worth at most $2 to me.
She actually didn’t mention the most valuable benefit of the card. Citi AA cardholders get a 10% rebate on the miles they spend on AA awards, up to 10,000 miles rebated (100,000 miles redeemed) per calendar year. That’s a free 10,000 miles a year for me for holding this card, and since I value 10,000 AA miles at $177, this alone more than pays for the annual fee of $85.
After politely listening to the benefits, I held firm. “Those are nice, but I can’t justify paying the annual fee just for those benefits.” At this point, she offered me 3,000 AA miles if I made $500 in purchases on the card within 3 months.
Never accept the first offer. There are usually several she can offer you, and you want to hear all of them to decide which is the best value.The offers usually come in a few flavors: miles, statement credit/waiving the annual fee, increased rate of mileage earning for a defined period.
I replied, “That’s a good offer, but I was hoping you could waive the fee.” This was to get an offer to waive the annual fee or to receive a statement credit. She said that she could not waive my fee, but she could offer me a $25 statement credit after $500 in purchases within 3 months.
To me this is a clearly inferior offer to 3,000 AA miles, which I value at $53.10. I persisted, asking for an annual fee waiver, but she said she couldn’t offer me that.
Instead she offered me a Citi AA card with no annual fee that earns miles at a rate of 1 mile for every $2 spent and has none of the benefits mentioned. I have no interest in that card, so I accepted the best offer: 3,000 AA miles after $500 in purchases in the next 3 months. For those $500 in purchases, I’ll be earning 7 miles per dollar (3,000 bonus miles + 500 normal miles divided by $500), which is a nice 12% rebate.
She told me that the bonus miles will post within 1 to 2 statements of completing $500 in spending, so I’ll be sure to complete the spending requirement before my next statement. That way the miles will post before the annual fee is due, and I can still cancel the card if it doesn’t fit into my future card plans. This is the exact reason I call in 3-5 months before the annual fee is due.
The offers I received were a step down from the offers I received when I called a few months back to “cancel” my Citi AA Amex card. On that call, I was offered an $85 statement credit after any five purchases. So a better offer for less spending. In that case, I made seven purchases for about $100 and got the $85 credit on the same bill. I don’t know if the inferior offers were a result of Citi lowering its offers or because I had spent more money on the Citi AA Amex ($5,000 vs. $1,500 on the Visa.)
This post was a reminder to call up to “cancel” your credit cards 3-5 months before the annual fee is due. Hopefully the example of my dialog has shown you how easy it is to get a retention bonus for a few minutes of your time. I’ll keep you posted on when the bonus posts and whether I cancel the card before paying the annual fee.