Anytime a credit card anniversary is approaching, you need to determine whether or not the annual fee is worth paying. If not, you may want to close the card or if possible, downgrade to a no fee card.
Will I lose miles/points if I cancel a credit card?
The answer to this question depends on the type of credit card in question. I’ll explain how to determine the answer.
Before you cancel a credit card you should consider a few things:
Tip: It is very important to stay organized, especially when you’re dealing with multiple credit cards and loyalty programs. I suggest keeping a spreadsheet. On that spreadsheet, as you open new cards list each one and include (among other things):
- Date opened (so that you know the anniversary date. This is when subsequent annual fees will be due.)
- Annual fee (to help determine whether or not you want to keep the card as the anniversary approaches).
Do the benefits outweigh the annual fee?
Some credit cards may be worth keeping and paying an annual fee.
For example, I keep my American Airlines credit card open despite the $95 annual fee because of the benefits. Here are a few:
- Free checked bag on domestic flights. Since checked bags usually cost $30 each way, 2 roundtrip flights on American Airlines per year would cost $120, which is greater than the annual fee! This is especially helpful if you have a family since up to 4 passengers on your reservation also get this benefit.
- Better boarding group. If I’m traveling with only a carry-on, this is important so that I can have access to the overhead bin storage. People in later boarding groups will have to check carry-on bags if there is no more overhead bin space.
- 10% of redeemed miles back on up to 100,000 redeemed miles per year. Getting 10,000 miles back a year may not seem like much but if you learn to stretch your miles like us, it makes the annual fee worth it!
I take more than 2 domestic roundtrips per year on American Airlines*, and there are additional benefits that make this card worth keeping.
*Even though many of my AA flights are booked with British Airways rather than AA miles, I am subject to AA’s baggage policy. Usually, the airline that is actually operating your flight is who determines the baggage policy, regardless of how you booked the ticket. Even when the ticket is booked with points from a partner airline program (such as British Airways Executive Club), I still get the free bag benefit on AA operated flights.
On the other hand, I’m struggling to determine whether or not I will keep my Amex Platinum open. My annual fee is due soon so once I make my final decision I will post about it! Update: I have decided to cancel my Amex Platinum and you can read about that decision here.
How long has it been since the card was opened?
Banks do not like when you cancel a card after only a few months. In other words, do not close your card as soon as you receive your bonus. If banks pick up on a pattern of this, your account could get flagged. This could possibly result in getting blacklisted from a bank. No bueno.
With that said, it is understandable to banks and very common for people to cancel cards with annual fees just before an anniversary. So don’t let that paragraph scare you out of this hobby. Just be smart about it!
There is no reason to close your card right after receiving a sign up bonus because you will have already paid the annual fee (if there is one). So my advice is to wait at least 10-11 months before you close a card (1-2 months before your card anniversary). Some banks even let you close a card after the annual fee is posted. Usually you will get a prorated amount back.
Is it possible to downgrade to a no-fee card?
Some banks may have lower or no annual fee versions of certain cards to which you can downgrade. This may allow you to retain certain types of points that would otherwise be forfeited.
Consider calling the bank and asking for a retention bonus
Last year I was ready to cancel my Amex Platinum (because I got the Chase Sapphire Reserve and I was not wanting to pay two large annual fees.) When I called to cancel, I was offered a retention bonus of 20,000 points. The 20,000 Membership Rewards points plus the benefits that come with the Amex Platinum were worth enough for me to keep it open for at least another year!
Still want to cancel a credit card? Make sure you don’t lose your points!
The best credit cards for travel can be placed in one of 4 categories. There are bank cards, hotel co-branded cards, airline co-branded cards, and cash-back cards.
Bank cards are cards that earn bank points such as Chase Ultimate Rewards and Amex Membership Rewards.
Hotel and airline co-branded cards are cards that earn loyalty points or miles for the hotel or airline with which the card is branded. For example, Chase issues Southwest cards, but Southwest cards earn Southwest points, not Chase points.
Cash back cards earn points that can be redeemed for cash, or just straight up cash back. Even though I categorize these credit cards differently than bank point cards, any rewards earned from cash back cards are basically bank points.
So, as they relate to this post, credit card rewards points can be placed in one of 2 categories.
- Bank points (including cash-back rewards)
- Airline and hotel miles/points
Canceling a card that earns bank points
Bank points are those that are earned from cards that are not co-branded with an airline or hotel.
For example, Chase Ultimate Rewards points earned from Chase Sapphire cards and points from Amex cards that earn American Express Membership Rewards are both bank points. If you close your cards that earn these points, you WILL lose your points.
- To avoid losing points, you can transfer your points to airlines or hotels. I generally advise against transferring points to any airline or hotel until you’re sure your dates/destination are available. But in this case you’re going to lose your points, so you might as well transfer them. I would just choose whichever airline/hotel you’re most likely to use.
- Once your points or miles are in a hotel or airline account, the points are yours to keep as long as you do not let them expire (subject to the policy of the hotel or airline). It is easy to keep them from expiring. I’ll explain more about that below.
- You can also use your Chase points to book travel through the redemption portal before you close the card.
- As I stated above, you could also try to downgrade or apply for a card with no annual fee in order to keep your points.
If you’re canceling a Chase Sapphire card you have another option:
- Transfer your points to another member of your household such as your spouse if they have an Ultimate Rewards earning card that they are keeping open
First of all, why would you cancel a Chase Sapphire card?! I’m kind of being serious, but there may be good reasons for this.
- One reason would be if you and your spouse both signed up for a Chase Sapphire card to get a sign up bonus. Now, your anniversaries are approaching.
- Since you can transfer Ultimate Rewards points to your spouse, there is no reason to keep both accounts open.
- One person could (and should!) keep the Sapphire open, and one person can downgrade to a Chase Freedom Unlimited card (which has no fee).
- With the Chase Freedom Unlimited card, you cannot transfer points to airline and hotel partners. But you can transfer points to your spouse who has a Chase Sapphire, and they can transfer to airline and hotel partners. Got it?
Cash back cards are similar
Rewards/cash-back earned from cash back cards are usually forfeited if you close the card. Make sure you redeem them before you close the card.
Canceling a card that earns airline miles or hotel points
If you have a credit card that is co-branded with a hotel or airline, the situation is different than bank points.
Chase issues Southwest Rapid Rewards credit cards. Your Chase Southwest Rapid Rewards credit card is linked to your Southwest Rapid Rewards account, but think of them as two separate entities.
Every month after your statement closes, your points earned from your credit card spend will post to your Southwest account. Once those points are in your Southwest account, Chase has (almost) nothing to do with them. I say almost because if you return a purchase your points can be clawed back from your Rapid Rewards account. But with reference to canceling a credit card, those points are yours. They will stay in your Southwest account even if you earned them with your Southwest credit card and you cancel said credit card. BUT, it is your responsibility to keep the points or miles from expiring. This is usually very easy.
One exception: points or miles earned during your last statement period (the statement period in which you’re closing the account) may be forfeited. So if you have lots of spend that you will earn points on, wait until the statement closes before canceling. Timing is very important! For example, let’s say I spend $2,000 on a card from October 11-November 5. At one point per dollar that’s 2,000 points. If my statement closes on November 10 but I cancel the card on November 5, I may not receive the 2,000 points. If I wait until November 11 to cancel, I will still receive the points. Again, timing is everything; make sure you time it right.
Keep your airline miles and hotel points active
Different airlines and hotels have different policies for retaining your points. The policy of most airlines and hotels state that you must have activity in x number of months. For Southwest, the policy is activity every 24 months. Activity is defined by Southwest as earning points (yes, even 1 point counts) either by flying or through partners. Many programs also count redemption as activity when it comes to keeping your points from expiring.
For Southwest (and other airlines), shopping through the airline’s shopping portal will keep your points from expiring*. If you find that you’re nearing 24 months of no earning or redeeming activity with Rapid Rewards, all you have to do is make one purchase through the Southwest Rapid Rewards shopping portal. This extends your expiration date for another 24 months!**
*Remember that you do not have to have an airline co-branded credit card to use an airline’s shopping portal!
**This is why staying organized and keeping a spreadsheet of anniversaries and expiration dates is so important!
Check the policy for individual airline and hotel mile and point expiration dates, but for credit card cancelation purposes, you will not lose airline miles or hotel points if you cancel an airline or hotel co-branded credit card.
Click here for a list of different hotel and airline expiration policies and how to keep your points from expiring!
Bank points (including cash-back) will be forfeited if you close a credit card that earns them
This includes (but not limited to):
- Chase Sapphire cards that earn Ultimate Rewards
- Amex Membership Rewards earning cards
- Citi Thank You points
You can keep miles and points that fall into the following categories:
Airline miles earned from a co-branded credit card including (but certainly not limited to):
- American Airlines miles from Citi or Barclaycard AA co-branded credit cards
- Alaska Airlines miles from Bank of America Alaska Airlines co-branded credit cards
- Southwest points from Chase Southwest co-branded credit cards
- British Airways Avios from the BA Chase co-branded credit card
Airline miles transferred from bank points, for example:
- British Airways Avios transferred from Chase Ultimate Rewards
- Southwest Rapid Rewards transferred from Chase Ultimate Rewards
- KLM/AirFrance FlyingBlue miles transferred from American Express Membership Rewards
- Delta Skymiles transferred from American Express Membership Rewards
Hotel points earned from a co-branded credit card including (but certainly not limited to):
- Hyatt points from the Hyatt Chase co-branded credit card
- Marriott Rewards points from the Marriott Chase co-branded credit card
- Starwood Starpoints from American Express SPG co-branded cards
- Hilton Honors points from American Express Hilton co-branded credit cards
Hotel points transferred from bank points, for example
- Hyatt points transferred from Chase Ultimate Rewards
- Marriott Rewards points transferred from Chase Ultimate Rewards
- Hilton points transferred from American Express Membership Rewards
If you have any questions about a specific card, please feel free to contact me.