United Airlines Credit Card Downgrade to Save Credit Hit

I have talked several times about the United Airlines credit cards that we opened last year. Both my wife and I opened a credit card because of a great offer at the time of 50,000 miles each, which nowadays seems like the new standard. We both have successfully padded our United accounts with over now 54,000 miles each thanks to the credit card bonus and spend, Netflix promotion, and various dining rewards. In addition, both of us received hefty credit lines with the new United Cards, and there lies the problem.

We know we will be hopefully acquiring a mortgage within the next year if our home would ever sell. So the idea is to do everything right to maintain our high credit scores. I maintain around a 780-820 credit score depending on the credit bureau. My wife’s scores are slightly less, but we both overall have excellent scores, which will help us qualify for the best interest rates and terms. So the goal is to do nothing that will negatively impact our scores.

The United Airlines credit cards that we have carried an annual fee of $60/year, due May 1, 2011. I have called Chase several times to see what were our options, which involved us really thinking through our best options. First, Chase would not allow us to reallocate the credit lines to another non-United card. I currently also carry a Sony Chase branded card. If I had to close my account, I was hoping I could move part or all of the extensive credit line over to my other card prior to closing it. That move would maintain my overall credit limit and minimize utilization. However, it was not an option because Chase would not let the reallocation out of the United card, only into the card.

Second, I was not concerned about closing the card for me, even if I did lose that amount of available credit, because it is not only a portion of my available credit. In other words, I carry high enough credit between my other credit cards, that it would have minimum effect on my utilization.

Now my wife’s picture is slightly different. Even though she has excellent credit scores, she does not have a lot of available credit. Therefore, if we had to close the United card in her name, there could be a detrimental impact to her scores. As a generic example, if she had credit cards with $500, $1000, and $10,000 limits, if she closed the $10,000 line of credit, that would mean she would only be left with $1,500 in available credit. As she spends each month, that eats into the $1,500 credit and lowers available utilization, all which impacts a credit score.

There began the careful balancing act for closing the cards. I called Chase last week to again see what options we had after explaining our circumstances. The first rep had nothing to offer. So I politely ended the phone call and called right back. This time I got anothing rep on the phone that offered us exactly what we needed. They could transfer both of our credit cards over to a no annual fee United Card. The only difference would be instead of the 1 mile/$1 spent, it would now be 1 mile/$2 spent. Otherwise, we maintained the same interest rates, credit lines, etc. Even more importantly, there was no new hard pulls to our credit reports.

We are not worried about the less miles per dollar spent because we do not use the credit cards that much. In addition, since we held the cards less than a year, I am hoping there is minimal impact by switching over the card. I will monitor our scores over the next couple of days to see if anything shows up.