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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, consider a few things:
First of all, are you sure you really want to cancel the card? If you aren’t using a card for everyday spending, the intuitive thing to do would be to cancel it. But there are some cards that are worth keeping year after year, even if you rarely use them for spending.
Do the benefits outweigh the annual fee?
Some credit cards may be worth keeping even if that means paying an annual fee.
For example, I hardly ever use my American Airlines co-branded credit card. But I keep it open despite the $99 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 receive 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.
I take more than 2 domestic roundtrips per year on American Airlines, so that benefit alone makes this card worth keeping.
Note: Even if you book an AA award flight with partner miles, you are eligible for the free checked bag if you have one of the AA co branded cards that have this benefit. This is important since many of my AA flights are booked with British Airways rather than AA miles. Different co-branded cards may have different policies, so read the fine print.
How long has it been since the card was opened?
There is no reason to close your card right after receiving a welcome bonus because you will have already paid the annual fee (if there is one). My advice is to wait at least 11 months before you close a card. 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
After I opened my Chase Sapphire Reserve, I was ready to cancel my Amex Platinum. 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
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 Ultimate Rewards points.
Cash back cards either earn points that can be redeemed for cash, or just straight up cash back in the form of a check or statement credit. Even though the reward currency may be marketed as points and miles, these rewards are only redeemable as cash. They aren’t like Amex Membership Rewards and other bank points that can be transferred to airline and hotel programs.
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, transferable Chase Ultimate Rewards points earned from Chase Sapphire cards and points from Amex cards that earn American Express Membership Rewards are 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:
There are 3 Chase cards in the Sapphire family that earn transferable Ultimate Rewards (meaning the Ultimate Rewards can be transferred to Chase’s airline and hotel partners):
All three of these cards have annual fees. You can downgrade (also known as product change) to a no-fee card in the Chase Sapphire family such as the Chase Freedom Unlimited card.
Downgrading/product changing does not result in a credit inquiry, nor would it affect your 5/24 status. In general, if you downgrade, you usually will not receive a welcome bonus for the card to which you’re downgrading. To receive a welcome bonus, you must apply for the card.
The Chase Freedom Unlimited card is a cash back card. The Ultimate Rewards points earned are not transferable to airlines and hotels. Instead, you have to redeem the points as cash at a rate of 1 cent per point. Downgrading from the Chase Sapphire Preferred to the Chase Freedom Unlimited would allow you to keep your Ultimate Rewards. The problem is, those Ultimate Rewards aren’t going to be as valuable as they were when they were transferable Ultimate Rewards.
50,000 Ultimate Rewards with CFU means you can redeem for $500. 50,000 Ultimate Rewards with CSP means you can transfer the points to airline and hotel partners, or you can redeem them at a rate of 1.25 cents per point in the Chase redemption portal (so that would be $625).
If you’re in 2 player mode, there’s a huge exception:
If you have a transferable Chase Ultimate Rewards earning card (such as Chase Sapphire Preferred), you can transfer rewards from the no-fee Chase Freedom Unlimited to that card. This means that rewards earned from the Chase Freedom Unlimited would function the same as rewards earned from one of the 3 transferable UR earning cards (such as Chase Sapphire Preferred).
In 2 player mode, this is important because Chase allows the transfer of points between 2 “household” members with different accounts*
*Note that while Chase may not ask for proof that both players are in the same household, use common sense. If you’re a married couple, this is a non-issue. You share an address, Player 1 is one spouse, Player 2 is the other spouse. Non-married couples sharing an address should also be in the clear. The gray area here is non-married duos that don’t share an address or “household”. While you may get away with it, you’re subject to scrutiny by Chase and you run the risk of losing your rewards.
Example: Player 1 and Player 2 are a married couple. Each have their own Chase Sapphire Preferred card. The anniversary is approaching and you aren’t sure that you need to pay the $95 each to keep the card. While I agree that you do not need to keep both accounts open, I highly encourage keeping 1 open. I’ll explain why in the next section. But first, here is my advice:
Player 1 should keep her Chase Sapphire Preferred card. Player 2 should downgrade to a Chase Freedom Unlimited card. It is free to add authorized users to both of these cards, so Player 1 could add Player 2 as an authorized user to her CSP. Player 2 could add Player 1 as an authorized user to his CFU.
The rewards earned from Player 2’s Chase Freedom Unlimited card can be transferred to Player 1’s Chase Sapphire Preferred Ultimate Rewards account.
With this 2 player method, you get to avoid a $95 annual fee while still having the ability to earn transferable Chase Ultimate Rewards. But it gets even better, because you’ll also be able to earn more Ultimate Rewards on your everyday spending!
Avoid the annual fee, plus earn more Ultimate Rewards points per dollar on your everyday spending
The Chase Freedom Unlimited card is one of our favorites for everyday spending. There are bonus categories, but the non category earn rate is 50% more than a Chase Sapphire Preferred:
- 5% on Travel purchased through Chase Ultimate Rewards
- 3% on Dining
- 3% on Drugstore purchases
- 1.5 % unlimited cash back on all other purchases.
The current welcome offer is $200 (or 20,000 Ultimate Rewards points) after spending $500 in the first 3 months. Also, earn 5% cash back (or 5 points per dollar) on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year. Note that to receive this welcome offer you would need to apply for the card rather than downgrade from another product (such as the Chase Sapphire Preferred).
The Chase Sapphire Preferred earns 1 point per dollar on all purchases that aren’t travel or dining (those are 2 points per dollar). But remember, rewards earned from the Chase Freedom Unlimited are cash-back rewards if the CFU is the only card you have. To me, 1.5% cash back isn’t as valuable to me as 1.5 points per dollar.
Click here for more information about pairing the Chase Freedom Unlimited with a transferable Ultimate Rewards earning card.
The dream team:
Canceling a cash back card
Rewards/cash-back earned from cash back cards are usually forfeited if you close the card.
The solution is very simple: 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.
For example, 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 your credit card and your Southwest frequent flyer account 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. When you cancel a Southwest Rapid Rewards co-branded credit card, any Southwest points earned from credit card bonuses and spending are yours to keep. They will stay in your Southwest Rapid Rewards account. BUT, it is your responsibility to keep the points or miles from expiring according to the airline or hotel’s policy. 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 on which you are earning points, 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.
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 any amount of points 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!
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 and cash-back rewards 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 Barclay AA co-branded credit cards
- Southwest points from Chase Southwest co-branded credit cards
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 World of Hyatt Chase co-branded credit card
- Marriott Bonvoy points from Chase Marriott co-branded credit 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 Bonvoy 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.
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