When I recently shared my secret obsession with extreme credit carding , one of the comments was from a reader, Bill.
Bill, who shares my love of making money from credit cards, averages about $2k in credit card bonuses per year. Nice work Bill!
He pointed out that he is constantly cycling through bonus-offer cards, but he always cancels them after cashing out the bonus, since most have yearly fees after the first year. He wanted to know more about why I keep such large credit lines open.
While I do like to keep cards open if they offer cash back  benefits in addition to the sign up bonus, the large credit lines also come in handy to keep my utilization low when I’m moving large balances for my credit card arbitrage.
But just like Bill, I do cancel cards I don’t plan to use regularly if they have an annual fee that kicks in after the first year.
Convert Credit Cards Instead of Paying Annual Fees
Wouldn’t it be nice if you could keep the cards open for the credit line, but avoid the annual fee and switch over to a card with cash back benefits while avoiding an inquiry?
I got a chance to test out a couple conversions this week when I called to cancel some cards from my $3,000 Credit Card Application Spree  a year ago. The results were very positive:
- US Bank FlexPerks: I cashed out my $175 bonus  and called to cancel the card before the annual fee kicked in. I was immediately offered a conversion to the US Bank Cash Plus  card.
- Starwood: I earned $300 in Amazon gift cards and some free hotel nights from the 30,000 bonus point offer last year (which is back again for a limited time ). When I called to ask about the annual fee they offered to convert my Starwood card to a Blue Sky card with no annual fee.
How to Convert
Cash Out All Your Points. To avoid forfeiting any points or cash back, I make sure to cash out all of my rewards before I call to cancel the card.
Reason for Closing. When they asked for my reason to close the account, I specifically stated that I didn’t want to pay the annual fee. Both companies immediately offered that I could convert to no annual fee cards .
Verify Details. Before I agree to convert, I verify all the details of the new card, including that the credit line will stay the same, the cash back on the new card, no annual fee, and no application or credit inquiry to convert.
Just Ask. If they don’t offer a conversion, before I go ahead and close the card, I make sure I ask if there are any other options for a card conversion.
Giving Up Bonuses
You might wonder why I would take a conversion on a card that offers its own sign up bonus. Shouldn’t I just close the card with the annual fee and apply for the no annual fee card?
I could, however, I like to complete two application sprees  per year for myself (and two for my husband). During each of those application sprees, I like to apply for two cards from each issuer. There are so many cards that offer larger bonuses, I usually like to target those first.
In addition, I like to keep as many open Amex cards to take advantage of the annual Small Business Saturday credits !
Now, if they offered to convert my card to a card with a big $250 sign up bonus, I’d probably decline it!
Do you close your cards or convert them when the annual fee kicks in?
More Credit Card Strategies
- Avoid Joint Credit Cards to Double my Sign Up Bonuses 
- Credit Card Bonus Strategies Q & A 
- Are Credit Card Rewards Taxable? 
- How Much Do Credit Inquiries Really Matter? 
- How to Collect Multiple Credit Card Sign Up Bonuses 
- How to Prioritize and Maximize Credit Card Sign Up Bonuses