How Much Will Credit Card Companies Offer to Keep Your Business?

Do you believe that your credit card issuer values your business? From the ever-present marketing to the industry’s generous sign-up bonuses, there is a lot of evidence that it does. But if you have any lingering doubts about your value as a customer, take note of what happens when you try to cancel your credit card. In most cases, you will be presented with a retention offer before your account is closed.

A retention offer is something that credit card issuers present to customers who ask to have their accounts closed. A typical offer may be a waiver of the annual fee, or some amount of points and miles if you have a rewards credit card. Sometimes, instead of waiving the annual fee, a card issuer will offer a statement credit to offset it in whole or in part. In other cases, a retention offer of additional rewards might be contingent on the cardholder spending a certain amount of money within a pre-defined time period. And appropriately enough, most retention offers are presented by a special department within the cardholder’s customer service group called “retentions.”

Why Retention Offers Exist

Between advertising and sign-up bonuses, card issuers can spend hundreds of dollars to acquire each new customer. At some point, they realized that it was worth it to make offers of cash, points or miles to their existing customers rather than lose them.

How to Get a Retention Offer

Perhaps you have an issue with your credit card in some way. If the problem is fixable, a retention offer might be cure. Call your credit card issuer and indicate that you would like to cancel your card, and you should be transferred to their retentions department. In some cases, cardholders actually call and ask to speak with retentions.

Next, tell them you are interested in canceling your card, and wait for them to ask why. Then, be honest. If you do not want to pay the annual fee, or you don’t feel you are earning enough rewards, then say so.

Also, keep in mind that your credit card issuer may call your bluff and choose to let your business go. If they do this, your card will be closed and could hurt your credit score since your credit utilization rate (one of the major factors in your credit score) will increase, at least until you get another card with a similar balance. You can see how your credit utilization is currently impacting your credit scores for free on Credit.com.

If the issuer makes a retention offer, you have several options. First, you can accept the offer and continue to use the card. Or, you could ask for another offer, as many card issuers will have a range of offers that they can present to customers. Finally, you can turn down the offers and close your credit card.

So What Should You Do?

Some savvy credit card users will never pay an annual fee without at least trying to receive a retention offer to have it waived. Others will try to see if they can get a few extra points or miles from their card issuer, knowing that there are many other companies competing for their business. (You can check out some of the best credit cards in America to see what the competition looks like.)

In the end, it can be nice to know that you are valued as a customer by a credit card issuer, and that they are willing to put their money where their mouth is. By learning about what retention offers are, and how to receive one, you can leverage your loyalty to reduce the cost of using your favorite cards.