If you applied for a new travel credit card with big plans to use it for a now-canceled trip, you might be wondering: Should I also cancel that card?
The answer depends on the potential impact on your credit scores, whether the card has an annual fee, and what other benefits the card confers even while you stay at home, among other factors. Here are the issues to consider before making your decision:
1. Will closing the card hurt your credit scores?
In general, closing credit cards can have a negative impact on your credit score because it lowers your total available credit. It may also affect the length of your credit history; if it’s a card you’ve held for a long time, the impact will likely be bigger.
That’s why many credit card experts suggest closing cards only if the gains outweigh that potential impact, and to think carefully about your timing. “I’d never suggest closing a card before you are going to apply for a loan or another card,” credit expert John Ulzheimer says. Keeping the card open also gives you access to credit if you need it in an emergency, like the one many unemployed Americans are currently facing with the COVID-19 pandemic.
2. Does the card charge a hefty annual fee?
Some premium travel cards come with large annual fees, north of $500. That fee can quickly pay for itself if you’re a frequent traveler and big spender. But if you’re staying home right now, you probably aren’t using all of those benefits.
“If there are hard dollar fees that are being levied each year and you’re not using the card, canceling it can make a lot of sense,” says Adam Koos, president of Libertas Wealth Management Group.
Canceling your card might also mean that you lose any accrued points and miles, so you might want to consider using them — potentially for non-travel-related redemptions such as cash back — before canceling.
“If the points typically expire, call the card companies and see if they have any special considerations during the pandemic ,” says Tiffany Grant, a financial coach and money blogger. “You will be surprised at what is being allowed and considered during this time.”
3. Are you planning to return to traveling as soon as possible?
The pandemic has temporarily halted most travel, but at some point, those restrictions will lift. If you are already planning to rebook your trip as soon as you are able to, then you’re well-positioned to get the most out of your travel card soon. So keeping it on hand probably makes sense, unless doing so comes with a high annual fee.
“I’ll be keeping my cards to continue accumulating points, status and those benefits, and will use those benefits for future travel with my family and for work,” Koos says.
4. Does the card offer other, non-travel-related benefits?
Travel cards sometimes come with other perks, such as rewards for ordering from restaurants or food delivery services. Some cards are also dangling retention offers and other incentives in response to the pandemic, such as annual fee credits, extensions on reward expiration dates and an extended welcome bonus period.
If your card issuer hasn’t offered one of those benefits to you, you can always call and ask.
5. Can you switch to a cash-back card instead?
Instead of closing your card, it might be possible to call your card issuer and ask if you can switch to a different product , such as a cash-back card, that comes with a lower fee or no fee.
“Contact the credit card company and request the company change your current card to one that carries no annual fee,” suggests Sam Boyd, a certified financial planner and senior vice president of Capital Asset Management Group, a financial planning firm. This strategy recently worked for him.
“The key is to maintain your number of cards, average credit history and available credit so it won’t impact your credit score,” Boyd adds. The new card’s rewards might also be more aligned with your current spending, which is likely centered more around groceries and household items rather than traveling.
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Kimberly Palmer is a writer at NerdWallet. Email: email@example.com. Twitter: @kimberlypalmer.