Why I Am Paying The Annual Fee On My EveryDay Preferred Right Before Closing It
One of the most known sayings out there is, timing is everything. It is a saying that has held true for me time and time again, especially when that timing is bad. I have one such occurrence with my wife’s Amex EveryDay Preferred card. I think the EveryDay Preferred is one of the best all around cards out there, especially if you are shooting for a one card wallet. Having said that, it no longer has a place in our wallets with the Amex Gold covering our grocery spend and the Blue Business Plus taking care of everyday spend. Throw in the fact that my wife is at Amex’s 4 card limit and we need to make some space and the EDP is ripe for the picking.
So why am I paying for an annual fee on a card I need to close? Timing!
Paying The Annual Fee Makes Sense
One of the best perks of the EveryDay Preferred card is the ability to earn up to 4.5X at US Supermarkets when you make 30 or more transactions in a statement period. This earning rate is capped at $6,000 per calendar year. That is the chance to rack up a nice 27,000 Membership Rewards points.
Knowing this, I wanted to try to max it out for 2021 before the annual fee hit. I knew it was due early in the year and that I was in a race against the clock. The problem is that the annual fee hit before I could complete my goal. American Express allows you to get a full refund on closure for up to 30 days. I won’t be able to make that work before the final points post from reaching the $6K US supermarket limit.
I still have around $2000 in grocery spend left to go. That is worth 9,000 Membership Rewards if I hit the 30 transactions to earn 4.5X on the spend. If I cashed those out via her Charles Schwab Platinum that is worth $112.50, a nice little chunk of change. But it would get mostly wiped out by the $95 annual fee since I will be outside the 30 day window when the points post and the spending is complete.
That is where a downgrade comes in to save the day. American Express only gives a full refund for closures in the 30 day window and will not prorate it after that…unless you downgrade. If I downgrade it to the EveryDay card with no annual fee she should get a prorated annual fee refund. Since it will be about a month into the year she should get all but about $8-$10 back. Paying $10 for $112.50 sounds like a good deal to me!
This works because she has already had the EveryDay card before. If she had never had it then I would probably want to hold off since downgrading to the EveryDay card would make her ineligible for the welcome offer on the card for 6-7 years.
After she downgrades the card and gets the refund she can then close the card without any additional cost. This would open up a slot if needed.
Final Thoughts
Another great saying, if there is a will there is a way, plays into this too. Even though I will need to pay an annual fee I don’t really want, or need, I should be able to get most of my money back. Not only that, but she should be able to close the account after jumping through some hoops and free up a valuable credit card slot with only paying a fraction of the annual fee. We will also be able to max out the grocery bonus spend one last time as well. That is what I call getting my cake and eating it too (am I on a cliché roll or what?!?).
UPDATE: When I went to downgrade the card I asked about retention offers as well. She was offered 7,500 Membership Rewards points with no spend required. I decided to take it and will need to keep the card open another year. This happened after I wrote the article but I thought it still offered value for an idea that thinks outside the box a bit so I left it. And, I will likely be in the same boat this time next year using the same game plan. I added the retention offer to our massive retention offer database as well.
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You might want to point out that downgrading is a bad idea if you have not had the card you want to downgrade to, as it would preclude you from getting the bonus on that card in the future.
I’ll add it in – thanks
I might have read you wrong, but just to be clear the MR bonus from 30+ transactions will post even if you close the card. At least it did when I closed mine last year, maybe that’s changed?
Yeah the main issue was that I didn’t max out the $6K spend in time before the 30 days was up.
You title was a little clickbaity. you were never going to close your EDP, you were just going to downgrade it.
I was going to downgrade and then close it after getting the refund.
How do you ask for retention offers? Do you just chat and ask if there are any retention offers? Or do you say you are looking at downgrading the card and then ask if there are any retention offers?
I just ask them to check if there are any retention offers up front.
Another reason to pay the fee is to not look like you’re gaming the system too hard. Without a much more complete picture it’s tough to say but for example if I cancel a card I applied for after one year when the annual fee hits and the first year’s fee was waived, that might make it tougher to get approved by the same bank in the future.
That is true as well – we have had this one for 3-4 years so I wasn’t too worried about that this time around.
Just curious how you manage to buy $6000 of “groceries” in a couple of months given Amex’s approach to certain kinds of purchases. Does Amex closely scrutinize your purchases? Is there a risk here? Thx for your good explanation of your reasoning for paying the AF in this instance!
They don’t tend to scrutinize that much when it is normal earn rates in my experience. Mostly when it is limited time spending offers etc.