One of the most commonly asked questions this week is how to get retention offers. In case you're not familiar with what a retention offer is, the idea is you call in, and the credit issuer gives you an offer for you to keep the card.
Why do retention offers exist?
For example, let's say you have the Amex Platinum and you came out ahead in Year 1. In Year 2 and onwards, the effective annual fee is usually $150 if you can take advantage of all of the travel credits and benefits.
Credit card companies make money off transaction fees every time you use the card. This also means that retention offers are based on how much you spend on your card, meaning if you only hit the minimum spend, you'll have a smaller retention offer (if any). On their end, it's a math equation to see if they can get positive expected value from your spend.
When you call into the retention department, the typical offer is $50-$200 for the Amex Platinum. My goal is to get an offer that is worth at least $150 to break even from the annual fee or come out ahead.
If you don't break even, then you can either downgrade or cancel the card. If you don't have any other premium cards, then it may be worth keeping, depending on how much you enjoy lounge access at airports, status at hotels, and benefits.
To illustrate another example of why companies have retention offers, let's look at internet/cable companies. In the SF Bay Area, there's Xfinity and AT&T. When you signup, the contract is usually a year long contract.
In the first year, there's usually a promotional offer, let's say $50/month. After the first year, the price goes up to the regular $80/month. When the first contract is up, you have a decision to make:
1. Cancel the contract and go with another provider
2. Negotiate another offer
Retention offers with credit cards is the same idea. Instead of being a service you're paying for, it's based on how much spend you put on the credit card.
How to get a retention offer
Most banks have a retention department. When you call the number on the back of your card, tell them you're thinking about canceling, and you want to talk to someone about retention offers.
Once you're in the retentions department, you'll need to explain your story again. Depending on who you're calling, you want them to bid against each other. For example, if you're calling American Express, you ought to mention you're spending most of your money on the Citi Prestige (or another competitor), which is why you want to cancel the Amex card. YMMV.
Important: be sure to call when the retention department is open during regular business hours. For most credit issuers, the retention department is by phone only and not chat or email. It's worth a call, especially if you use the card often.
One thing to consider is retention offers are based on the credit issuer and the card. Some issuers like Bank of America don't have retention offers at all.
The main takeaway is that if you have a credit card with an annual fee coming up, and you won't get positive expected value in Year 2, it doesn't hurt to call the retention line.
A lot of people are scared to call in because they're afraid of getting rejected, but there's not a downside. Worst case, nothing happens.
Want to help the community? We're gathering data points to keep track of retention offers people receive from different credit issuers. Feel free to tell us about your experience in the survey below. Responses will be made public here.