How to Negotiate Retention Offers

As time goes by, needs change and so does the utility of certain credit cards.

Perhaps a card that was your go-to choice for everyday expenses now sits at the back of your wallet collecting dust. Or perhaps you earned the welcome bonus on a card only to realize that its bonus spending categories and perks offer you very little ongoing value.

Whatever the reason may be, credit cards can lose their value, and it’s important to periodically review the cards you hold and the annual fees you pay each year. Otherwise, annual fees will end up eating into your rewards, preventing you from maximizing the return on your spending.

While you might be tempted to cancel a card that doesn’t do much for you, you should think twice about doing so. A far better option is to ask for a retention offer. Failing that, you should consider a product change. And if that doesn’t work out, only then should you consider canceling the card.

Let’s look at what a retention offer is and how to negotiate one for yourself.

What Is a Retention Offer?

A retention offer does as it says—it’s an offer made by card issuers to try to retain you as a customer.

When you first apply for and open a credit card, banks and card issuers try to entice you using a welcome offer. This typically comes in the form of bonus points or cash back after hitting a minimum spending threshold.

On the part of the card issuer or bank, this offer is made in the hope you’ll both apply for the card and continue to hold it over many years. However, if you were to cancel your card within the first few years of card membership, with little spending charged to it, card issuers would lose out on revenue—the return on their initial investment (the welcome bonus) is low.

Therefore, card issuers have an incentive to keep you as a customer, particularly in the first few years of card membership or if you have a lot of spending history on the card.

If you contact your card issuer looking for a retention offer, they may give you one of the following options:

• Bonus points or miles with a minimum spending threshold to earn them
• A statement credit, sometimes with and sometimes without a minimum spending threshold
• An annual fee waiver or reduction

The more you charge to the card, the better your odds are of receiving a retention offer.

How to Negotiate a Retention Offer

Typically, it’s best to ask about a retention offer just before your card’s annual fee payment is due. This is the time in which people consider the value of holding a card and might consider canceling it. That said, there’s nothing stopping you asking for a retention offer at any time of the year.

You can call your card issuer to discuss the possibility of retention offers or talk to a representative at a physical branch.

If you negotiate over the phone, you’ll likely first have to go through an automated phone agent. Be careful not to say that you’re calling to cancel your card as this may result in your account being automatically shut down before you get the chance to speak with a real phone agent. Rather, you should say that you’re calling to consider canceling your card or something else along lines.

Once you’re connected to a real phone agent, it’s best to lead with the argument that despite the card’s benefits, you can’t justify paying the annual fee. You can list what you like about the card but explain that it doesn’t add enough value to continue holding it at its current cost. From there, you can ask about the possibility of a retention offer.

You may first be met by a sales spiel detailing how wonderful the card is, but simply bring the conversation back to your original point. You can also explain that you can enjoy many of the same benefits the card offers from other cards that you currently hold.

If you’re lucky, the phone representative will make you a retention offer. Typically, you’ll have a few to choose from—perhaps bonus points or cash back and a statement credit or annual fee waiver. Pick the one that you think can offer you the greatest value.

Don’t be surprised if you receive retention offers that are almost as lucrative as the original welcome offer on the card. An annual fee waiver can significantly increase the value of your card. That’s why it can be a good idea to try and get a retention offer every now and then, even if you aren’t thinking about closing the card.

There’s nothing stopping you from calling your card issuer once a year to ask for a retention offer—the worst they can do is say no.

Alternative Options

If you’re seriously thinking about closing a card account and your card issuer won’t give you a retention offer, try requesting a product change.

A product change is when you switch from an existing credit card to a different one—either as an upgrade or downgrade—without needing to make a new application. For instance, if the annual fee on a certain card is too high and the value proposition is too low to justify holding it, you can ask to downgrade to a $0 annual fee card.

The benefit is that your original account will remain open on your credit report and you won’t receive a hard inquiry on your credit score.

The downside is that you can only switch to cards within the same card family, and you’ll likely be ineligible to receive the new card’s welcome offer.

However, product changes remain a great way to avoid the negatives of account closure. If you close your credit card account, the overall age of your accounts will decrease and your credit utilization rate will increase (assuming you were carrying a balance) which can result in your credit score taking a hit.

Final Thoughts

Many of the good things in life you’ve got to ask for—retention offers are one of these things.

So the next time a card doesn’t seem worth holding onto, give your card issuer a call and ask them about the possibility of a retention offer. At worst, they say no. At best, you could get tens of thousands of points to put toward your next points-funded vacation.