When a new year rolls around, I always reflect on my finances and try to find ways to level up my money management. An area I’m focusing on this year is my credit card usage. I recently learned about two new ways to save money on annual fees, which I thought I’d share below. And I’m revisiting my credit card benefits to see if there are things I can do to maximize my earnings. Here are 4 credit card hacks you can try to improve your finances in 2024.
Try to Downgrade Your Annual Fee Card
Last year I got my first annual fee credit card. Although I was hesitant to sign up for a card with a recurring fee, I decided the rewards were worth it. My Marriott Bonvoy Boundless card only costs $95 per year and comes with a free hotel night award that makes up for the fee. But if I ever change my mind, I plan to ask for a card downgrade instead of closing my account.
Canceling a credit card can hurt your credit score by lowering the average age of your accounts and your credit limit. But if your credit issuer has lower tier cards in the same family, you may be able to downgrade, which doesn’t affect your FICO score. For example, there’s another card in the Marriott Bonvoy line called the Bold card. It offers fewer perks than my Boundless card, but doesn’t have an annual fee. If I ever get tired of paying $95 per year, I plan to request a downgrade to the Bold card.
Downgrading your card allows you to eliminate your annual fee without affecting your credit because your account never gets closed—the card just gets switched. Of course, this strategy only works if your issuer allows downgrades and has a lower tier card available. But it’s worth trying because it’s an easy way to save money. You’ll usually get a new card in the mail quickly and be able to use the same login info to manage your account, making the change frictionless.
One thing to keep in mind is that credit card issuers frown on downgrading too quickly. It can look like you’re trying to game the system for sign-up bonuses if you switch too soon. So it’s usually best to wait until your annual fee card has been open for at least one year before requesting a downgrade.
Ask About Retention Offers
Another credit card hack I recently learned about is asking for a retention offer. Credit card companies don’t want you to cancel or downgrade your premium card. If you let your issuer know that you’re thinking about closing your account because of the annual fee, they may offer you perks to get you to stay. It’s not unusual for them to reduce or waive the annual fee or give you bonus points as an incentive.
However, you have to be careful about the way you phrase your request. Some credit card companies have automated systems that handle customer inquiries. If you say that you want to close your account, the automated system may start the card cancellation process, so be careful! Ask to speak to a human representative or the customer retention department if your credit issuer has one, and then make your request.
Save Your Credit Card Points
It’s tempting to use your credit card points to pay for entertainment and travel. However, imagine how much financial progress you’ll make if you put your points to work for you instead!
Receiving 5% back on groceries or 3% back on gas can add up to hundreds of dollars in rewards each year. Redeeming these points for cash and stashing the money in a savings or brokerage account can help you build financial security.
Instead of wasting my points on fast food gift cards, I’m planning to be more responsible with my credit card earnings this year. I’m also going to be more mindful about how I use my credit card and ensure I’m only swiping it to buy essentials.
Take Steps to Maximize Your Rewards
Credit cards offer lots of perks, but it’s easy to miss out on certain rewards if you’re not paying attention. For example, my Chase card offers a higher rewards rate on different rotating categories each quarter. However, I have to activate by a certain date in order to take advantage of these special rewards rates. This year I’m planning to be more on top of these activation dates so I don’t miss out on extra points.
My Chase card also runs special cash back offers at certain retailers throughout the year. Right now I can get 15% back on an online Walmart purchase of up to $100. This is a great deal that I can use to score a discount on essentials that rarely go on sale. However, I often forget to redeem these offers because they’re only available for a limited time. I’m going to try to stay on top of special perks like these to maximize my rewards in 2024.
To make the most of your cards this year, take some time to review your membership benefits. If there are perks you’re not using that could save you money, think about ways you could take advantage of them. Or consider downgrading your annual fee card to save money if it has benefits that you no longer need.
What are some credit card hacks you’ve discovered that have helped you save money? Which credit cards in your wallet offer the best perks? Share your thoughts in the comments below!
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