Maybe. This formula can help determine whether your credit card’s annual fee is worth it. You’ll have to input variables like the rewards rates, the value of other benefits, and, well, the annual fee.
While spending rewards might go up this year, the value of less-concrete benefits such as airport-lounge access or Hilton Diamond status could suddenly be worth $0 if you have no plans to travel anytime soon.
Here’s why you might reasonably still want to cancel your expensive travel credit card:
You’re losing out on other benefits. Remember why you applied for your fancy travel card in the first place? Chances are, you wanted the Citi Prestige® Credit Card for the fourth-night-free perk on hotel stays—not a $250 grocery credit.
It’s sort of like being a vegetarian at a steak house. You can make it work, but people go there for the prime rib, not the potato salad. With no plans to spend a night in a hotel room—let alone four—you’re losing out on your card’s best benefit. Using your Prestige for a statement credit on supermarket spending and nothing more is the financial equivalent of ordering just a salad at a steak house.
Cancelling isn’t necessarily a bad financial move. You might experience a slight, temporary dip in your credit score if you close a card, as it can affect scoring factors like your credit utilization ratio or the age of your credit history.
But a small dip might be worth it, as cancelling a credit card can simplify your life and save you money in annual fees—potentially hundreds of dollars, if you have one of the really luxe cards.
The grocery rewards are temporary anyway. A 12x points rewards rate is shiny, but it won’t last forever. Once the bonus period ends, you’ll have to reevaluate your cards again.
A spokesperson for American Express said the company “will continue to evaluate as time goes on” whether to extend the period for bonus rewards on supermarket spending. Otherwise, most of these cards typically offer a measly rate on groceries.
You may be able cancel your card and still retain some benefits. There are some situations where you can dump your card but keep the best perks.
Many people go for co-branded hotel and airline cards primarily to earn automatic elite status. And many loyalty programs—separately from the credit card companies—have announced that members with existing status will retain it through the following year.
For example, your status in the Southwest Rapid Rewards program as of April 16, 2020, will automatically continue through December 31, 2021 (find out if your own hotel or airline loyalty program extended your status). That’s whether or not you still hold that credit card.
See if you can downgrade your card rather than cancel it outright. You may be able to downgrade your card to a similar, no annual fee version—but there’s no guarantee that your bank will honor your request.
With most banks, you have to call customer service to request a downgrade. For example, Wirecutter staffers had success downgrading their $550 annual fee Chase Sapphire Reserve® to the $0 annual fee Chase Freedom® Credit Card—both of which currently offer 5x points at grocery stores.
Consider cash back credit cards instead. As opposed to getting stuck with travel points or miles, a cash back card earns rewards that you can use now, and in the most fungible currency possible: dollars.
[Editorial note: The evaluations of financial products in this article are independently determined by Wirecutter and have not been reviewed, approved, or otherwise endorsed by any third party.]