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Is now the time to downgrade your premium travel credit card? - Business Insider

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Don't close your credit card to avoid an annual fee unless that's your last option — your first choice should be to downgrade to another card with no annual fee to preserve your credit score

I don't mind paying for an annual fee if I get at least that value in return each year, but I sometimes find a card is no longer worth it. In that case, downgrading can eliminate the annual fee. I usually give up rewards and benefits, but with a downgrade, I can keep the card open and still save on annual fees.While it makes sense to close old bank and investment accounts you no longer use, you shouldn't rush to close a credit card just because it isn't your main card.

Closing a card has the opposite result. It stops adding to your average age of credit and lowers your total available credit. Lower available credit can hurt your credit utilization, another big factor in your credit. When you downgrade a card, you can usually keep your account number and all of the benefits of a card with longevity. But you can stop paying that sometimes-expensive annual fee.While my household has nine cards with annual fees, we have 20 cards in total. Many of the 11

started as cards with an annual fee. By cutting annual fees on cards I don't use as often, I can point those dollars to cards that give me the best value everywhere I use them.used to be an Amex EveryDay® Preferred Credit Card from American Express with a $95 annual fee. This used to be my main card for daily purchases, but I switched things up to better meet my needs. The EveryDay card has no annual fee and I use it for an occasional purchase to keep the account active.

 

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Paying to use a credit card is a bit hard to comprehend when countless of cards are free

As an Australian living here in America, it makes absolutely no sense why CLOSING a line of credit impacts your credit score negatively. After all, you are proving by closing it that you're responsible enough to not need a line of credit anymore..

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