What Are Credit Card Retention Offers?

Definition of Retention Offers & How To Ask for One

A credit card customer smiles about a successful attempt to get a retention offer.
•••

Luis Alvarez / Getty Images

The credit card market in the U.S. is a competitive space. As a result, card issuers rely on benefit-heavy cards, large welcome offers, and low interest rates, among other tactics, to gain and keep customers.

Among those tactics is the credit card retention offer—a tool that issuers use to entice you to keep your account open. Retention offers typically come at the request of the customer and can include waived annual fees, statement credits, or even reward points.

Learn what exactly a credit card retention offer is, how it works, and how to ask your bank for one.

What Are Credit Card Retention Offers?

Banks spend a lot of money acquiring their customers. Whether they’re using large sign-up bonuses or waived annual fees, the acquisition cost for card issuers can mean that they may not see a profit from their cards for years.

When customers ask to cancel their cards before the break-even point, banks lose out, and this is when retention offers can help. In short, the bank will do what it can to keep your business because it’s cost-effective.

“Credit card retention offers are concessions that issuers will often make to keep a cardholder from closing the account,” John Cabell, director of banking and payments intelligence at J.D. Power, told The Balance in an email. “Statement credits, [a] reduced annual fee, or bonus reward points are examples of the type of offer an issuer might make to a qualifying cardholder. Often the bank provides these offers when a customer is in good standing but contacts the issuer with intent to close the account.”

How Do Credit Card Retention Offers Work?

“All banks want to retain customers, and they will attempt to keep a customer who has a large spend and good payment history,” Cabell said, and this is especially pertinent during economic seasons that affect travel.

The travel industry took a hard hit in 2020, and many credit card users had difficulty utilizing travel-related benefits and statement credits offered by cards with airline and hotel rewards.

While banks are reluctant to reveal their retention offers, customers have been more than happy to share their retention-offer experiences on numerous forums and websites dedicated to travel rewards. Many of these cardholders found that calling in around the time their annual fee was due resulted in customer service representatives offering statement credits or reward points.

Be aware, however, that banks don’t give retention offers to just anyone, Cabell said. They usually reserve the best offers for customers worth keeping from a financial perspective.

Should You Ask for a Retention Offer?

You may be considering closing your credit card if you don’t use it, don’t want to pay the annual fee, or don’t think its benefits outweigh its cost.

Before you do so, however, it may be a better idea to ask for a retention offer first. Because banks want to keep you as a customer, they can offer incentives that will help offset the cost of the annual fee or may even waive it entirely.

Retention offers are usually a one-time perk, so only request one when you really need it.

Even if your bank declines to give you a retention offer, you may want to rethink canceling your card. Your credit score is based on several factors, including length of credit history and total available credit. If you’ve held the card for a long time, canceling it can negatively affect the length of your credit history and thus, your credit score.

The same is true for total available credit. When banks look at your credit score, they look at the total percentage of available credit that you have. This isn’t an issue if you keep your credit card utilization at 0%, which means you don’t keep a rolling balance on your cards. However, if you hold a balance on any of your credit cards, closing down a credit line will decrease your available credit and drive up your credit utilization. This can negatively affect your credit score.

How To Ask Your Credit Card Company for a Retention Offer

The process to ask your card issuer for a retention offer is fairly simple.

Wait Until Your Annual Fee Is Due or Posts

Generally speaking, card issuers are more likely to give you a retention offer when your annual fee is due, or it’s already posted to your account.

Call Your Card Issuer

When you call your bank, ask to speak to a retention representative. Avoid mentioning card closure on any automated system in case it automatically closes your account.

Talk to the Customer Service Representative

Once on the phone with a person, explain to them that you’re concerned you’re not receiving the full value of your membership from your credit card. You can also ask if they’re able to waive any annual fees, and you may want to mention that you’re thinking of closing the card.

Depending on the bank, the representative may ask you questions about your usage and any benefits you’ve utilized from the card. The representative will then provide you with a retention offer if they have any available.

Accept or Reject the Retention Offer

If the bank chooses to make a retention offer, you then have the option to accept or reject it. You may want to deny it if it’s not very strong or you don’t otherwise see the value of it. If you decide to accept the retention offer, the representative will apply it to your account.

Key Takeaways

  • Before canceling your credit card, considering asking for a retention offer.
  • Credit card retention offers can come in the form of waived annual fees, statement credits, or additional bonus points.
  • Not everyone will receive a retention offer; you’ll need to contact your bank directly to find out if you’re eligible.