This pandemic is something that is truly unprecedented. We haven’t seen anything even remotely close to this for over 100 years. Just the other day, we heard that in just the last week, over 3 million people in the United States filed for unemployment at the same time, that’s truly remarkable, and far outweighs 2008, let alone, the Great Depression. In times like these, it may make sense to cut back on every single expense you may have until things start to stabilize.
At the end of the day, credit card annual fees are quite a first world problem. However, before you go and cancel them, you do have quite a few options in front of you.
If you aren’t expecting to pay an annual fee on a card for more than a few months away, I wouldn’t even do anything just yet. Chances are, that everything will be back to normal. What if you’re in the short term though? It may be tempting to downgrade, or even cancel your credit cards. Before you do so, consider calling it for a retention offer. This is an offer that your lender will offer you to keep the credit card. For some, it may be waiving annual fees, for others, that may mean getting bonuses that would far outweigh the annual fee.
If you get either of those two offers, it would make sense to keep the card, at least for another year. In 1 year time, things will have definitely blown over, and you’ll probably be in a better financial spot again. In the worst case of not being offered any sort of compensation, there is always the downgrade path. Many cards, especially the ones we advocate for, always have a downgrade path. This way, you could temporarily downgrade a card until you would be in a better position to pay the annual fee.
I would advise against canceling a card with the exception of subprime cards that charge fees for ridiculous things such as paying your card balance online or cards that accrue interest everyday. Those cards, you could cancel. For every other card though, it helps your credit report to keep cards open as your average age of accounts gets older with each passing month.
None of this situation is easy. Hopefully we will all be able to return to our everyday lives as soon as possible. That being said, if you were negatively impacted by the coronavirus, there are a few options available to you to save some money. Whatever you decide to do, I would advise closing cards completely unless you are looking at subprime cards that would charge an annual fee such as Credit One cards.
The two best options to you are calling in to get a retention offer, or downgrading to a card with a lower, or no annual fee. Lenders can understand what we are all going through, and it would make sense for them to keep your business as long as they can.
Have you made any changes to your portfolio with this pandemic? Will you go back to anything as soon as you get back on your feet? Let us know down in the comment section below!