What is a credit card retention offer (and how to get one)?
Play the game right and get reduced fees and sweet perks
Consumer finance expert, author and “Opening Credits” columnist.
As with all relationships, the one between you and your current credit card can sour. Looming fees and lackluster benefits can cause you to consider closing the card. Before bidding adieu, though, you may want to give the account issuer an opportunity to woo you back.
If you play your cards right, you may be presented with a credit card retention offer: reduced costs and sweet perks if you stick with the account and use it a certain way.
Credit card retention offers can be advantageous to your bottom line, so they are worth exploring and can result in free miles, points or waived fees. The right deal can rekindle the enthusiasm you might have felt when you first signed on with the card.
Steps to take to get a credit card retention offer:
What is a credit card retention offer?
In a nutshell, a credit card retention offer is a “here’s what we’ll do to keep you as a happy customer” arrangement. Although the terms and conditions were spelled out in the original agreement, the issuer may adjust or add to the contract to appease a worthwhile cardholder.
Why would an issuer be so amenable? Nessa Feddis, senior vice president of the American Bankers Association, says it is far more expensive for a lender to acquire a new customer than to retain an existing one.
“In a competitive market, such as for credit cards, banks are trying to differentiate themselves and respond to a customer’s need,” says Feddis. “People should always contact them if they’re looking for a better deal.”
See related: 5 tips for negotiating rewards card annual fees
The reason retention offers exist is to inspire profitable customers to continue to charge with the card and not cancel it. What rentention offers are not designed for is to help people who are in financial trouble get back on track, so reducing interest rates and eliminating penalties won’t be part of the deal. Rather, retention offers typically include what people who could take their premium card business elsewhere would want: lower fees, higher points and better perks.
Fees, points, and perks
Many premium rewards cards have annual fees ranging anywhere from $95 (such as the Capital One Venture Rewards credit card or the Chase Sapphire Preferred card) to $450 (Chase Sapphire Reserve), which are sometimes waived during the first 12 months of ownership.
However, when the annual fee comes due in the second year, some cardholders may balk and threaten to cancel the card. The issuer, then, may offer to waive or reduce the annual fee or offer a cache of points, the value of which may offset or reduce the cost the annual fee. In exchange for accepting the retention offer, you may need to keep the account active, or you may be required to spend a set sum within a fixed period of time.
Sebastian Fung, the San Francisco founder of AskSebby, a website dedicated to helping people make smart financial decisions, is an advocate for taking advantage of retention offers.
“Credit card retention offers are usually an easy way to not be charged the annual fee,” says Fung, who has accepted many retention offers. “For example, if the fee is $95, they’ll charge the same but give you 5,000 points instead. If I didn’t get the offer, I’d have reevaluated the card, but the points were worth more than the fee, so it was a no-brainer.”
Just don’t expect exceptionally high annual fees to be eliminated, says Jason Decker, travel card expert and founder of Denver-based Nomad Travel Hacker.
“In my experience, a $400 fee won’t be waived, but the company will agree to give points or an account credit instead,” says Decker. “They may or may not be equal to that fee. For example, I’ve received a $50 credit included in the retention offer. But if the annual fee is under $100, you have a good chance to just have it taken off completely.”
If you’d like a slew of rewards points to keep the card open, retention offers can be especially compelling.
“On my American Express card, I recently got 7,000 Starwood Preferred Guest points in exchange for spending $500 in one month,” says Ben Hedges, a New Jersey-based creator of Credit Shifu, a YouTube channel that educates consumers about travel cards.
With another recent retention offer, he received 10,000 points with a one-month, $1,000 minimum spend, says Hedges.
Retention offers also can feature a more robust reward program, with the ability to earn points faster.
“Some, like U.S. Bank and Citi, may offer elevated points if you keep the card,” says Fung. “If you normally earn 1 percent cash back, they may double it with the offer.”
And then there are the unique perks. Credit card issuers may try to keep loyal customers with complimentary gift cards or even tickets to a coveted show.
“I have a friend with an American Express Platinum card, and they gave her four free tickets to a Taylor Swift concert,” says Fung. “They mentioned that it was because she had called them earlier, asking about the terms of her account. She must have seemed unhappy with it, so they made the retention offer. So even if you don’t call and tell them that you’re thinking about closing the account, it can trigger an offer.”
Make yourself retention ready
According to Fung, credit card retention offers are usually made to people who charge a lot with the credit card. “That’s because the transaction fees pile up every time you use the card,” he says. Merchants pay credit card issuers an average of 1.55 to 3.5 percent of the sale, so the more you charge, the more financially attractive you are to the issuer.
There is no specific amount you’d need to charge to be considered a high spender, as it depends on the issuer and the credit card, and expectations vary among issuers. However, when the transaction fees have exceeded the price of the annual fee, your worth as a cardholder escalates. For example, if you charged $14,000 last year, the issuer could have earned anywhere from $217 to $490 on the transaction fees alone. High charge volume can, therefore, put you in a more favorable position.
“Even if you never carry a balance so you don’t pay anything in interest, the company is still getting paid, and they don’t want to lose you,” says Fung. “For them, giving up the annual fee might be worth it.”
To score a credit retention offer, exercise your credit card by taking it shopping.
“A lot of people get the sign-on bonus and then stop using the card,” says Decker. “That’s not a good strategy if you want a retention offer. Start using it at least one to two months before you try to show that you are a valuable customer.”
The offer process
Before calling your card issuer, first research what they may have given other cardholders. Much of the most up-to-date card issuer deals published by cardholders can be found online, such as a recent retention offer published in Miles to Memories, a website for cardholders wanting to leverage their loyalty programs.
For example, a current retention offer for a Citi ThankYou Premier cardholder was a $95 credit for a $95 spending requirement (the card has a $95 annual fee that is waived the first year). In addition, the cardholder could choose between either 500 bonus points for spending $500 for 16 consecutive months or 1,000 points for spending $3,000 in three months.
1. Prepare your presentation.
2. Time it right.
3. Call the phone number on the back of the card.
4. Present your case.
Once with a retention representative, review why you’re dissatisfied with the credit card, and say that you hope you can find resolution. Review your merits as a cardholder, then ask if there are any retention offers available to you. If you know what the issuer has offered other cardholders recently, ask if that is still on the table.
5. Weigh your options.
The representative will check on your account status and the company’s potential retention offers. If you’re eligible for a retention offer, you can begin to negotiate. For example, you may be presented with a waived annual fee plus 7,000 points for a $500 minimum spend, but if you know you’ll use the card more, ask how many points they’ll give for increasing the spending requirement. Also, find out if the card issuer will throw in any credits, special benefits or the ability to earn more points. It doesn’t hurt to ask.
6. Secure the agreement.
After you agree to accept a retention offer, the representative will read the updated terms and conditions. With your verbal authorization, the deal will be sealed. You probably won’t get an email or hard copy of the retention offer, so jot down the representative’s name and identity number, and note the time and date that you called. That information will be useful if there are any discrepancies later.
As for what not to do, Fung has some warnings: “Avoid saying, 'I just want to cancel my card,’ because they might take you up on it. Don’t be overly aggressive and demand a bunch of free stuff or else. Be polite! It always helps to be nice.”
In the event you’re denied any retention offer, don’t give up. Call back in a few weeks and try again. A retention offer may be available to you at the point, since these offers change often.
“It’s a great time to play this game,” says Decker. “The well is not running dry. Credit card retention offers aren’t going away. Why would they? These deals make everyone happy; everyone wins.”
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