Canceling a Credit Card? | Don't Lose Your Points! - YouTube

Hi there, it's Ernest from Trip Astute. In this video, we're discussing what you

should do before canceling your travel credit card.

(light chiming music)

The end of the year is a

good time to reflect on whether you're getting the value you want from your

credit cards. Sometimes our spending habits or travel goals change with life

events, so it's healthy to re-evaluate whether you're getting the full value

from your travel credit card. In a previous video we explored why it's

sometimes worth paying an annual fee on a card.

I won't get into all the details, but I have some cards where it's worth paying

the annual fee every year even if I don't use the card, since the annual

benefit is worth more than the fee. An example would be the Chase Hyatt and

IHG cards which give me a free night stay every year as part of my annual fee.

One thing I would caution against is cancelling your card immediately after

earning your opening bonus. Doing so can hurt your relationship with the issuer,

and definitely jeopardize future applications with them. Instead, I would

give yourself at least 10 months to evaluate whether the card is a good fit

and whether you're getting value from the card. So if you're considering

cancelling your credit card, here are some quick things to consider. Number 1:

Transfer or spend any remaining points. This is a common mistake made by a lot

of folks. If you cancel your card, you'll often lose the points associated with

those cards. This is generally the case with cards associated with flexible point

programs like Chase's Ultimate Rewards or American Express' Membership Rewards.

For these situations, I suggest transferring your points to

another card that earns the same type of points, transferring to a travel partner,

or transferring to a household member. Transferring to another card that earns

the same points is really easy. For example, here's a list of cards from the

three major flexible points programs that can share points and will allow you

to move their points within their respective family. For co-branded cards,

which are basically cards associated with a brand other than the issuer, like

the Chase Hyatt or United card, the points are with the travel partner. In

this case, you're usually safe to cancel the card without losing your points. So

even though you cancelled your card, the points are with the travel company,

like Marriott or Southwest, so they won't be lost. However, any charges that haven't

posted to a statement may not make it to the travel partner once you cancel

your card. Number 2: Ask the issuer for a retention offer. Sometimes it pays just

to ask whether you can have the annual fee waived or offered a retention bonus.

This can be really hit or miss, and I wouldn't do it unless you're seriously

considering cancelling your card. Though it's not uncommon for issuers to offer

incentives to keep card members from leaving.

Number 3: Consider downgrading your card instead of cancelling. Since your

credit score can often take a hit if you cancel a card, a better option is to

downgrade your card to a free version. This can often be done with cards that

earn the same type of points. For example, a Chase Sapphire Preferred or Reserve

card can be converted to a Chase Freedom or Freedom Unlimited with no annual fee.

Here are some examples of popular rewards cards and their no annual

fee equivalents. You'll often lose some of the benefits and perks that come with

a premium card, but this method will usually allow you to keep your points.

Also, this strategy is useful if you're restricted by an issuer's rules, such as

Chase's 5/24 rule, but want to get one of their new cards. I actually did this when

I got my Chase Sapphire Reserve. Since I already had a Sapphire Preferred, I

downgraded it to the Freedom Unlimited since I wanted the card anyway, and was

willing to forfeit the new card opening bonus because I plan to keep the card

for the long term. Number 4: Dispose of your old card. Most plastic cards can be

destroyed in a shredder, but if your card is metal, you definitely want to send it

back to the bank. Do not run it through the shredder since it will get stuck!

Most issuers can provide a pre-paid return envelope if you need to send one

in. You can also drop them off with your issuer if they have a branch near you. I

would just suggest marking the card with "do not use" in the signature area. Do you

have any tips for cancelling a credit card? If so, let us know in the comment

section below. We've included referral links to some of the popular Chase

cards. Trip Astute does get a commission if you use our links. It doesn't cost you

anything extra, but it does help us to continue creating content

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Until next time, travel safe and travel smart.