If I Cancel My Credit Card Do I Lose My Miles?

When considering credit card cancellation, many individuals worry about their accumulated rewards. Understanding reward program structures and issuer policies is key to managing your benefits. This article clarifies what happens to rewards when an account closes and how to preserve them.

Understanding Credit Card Rewards Programs

Credit card rewards programs offer incentives for card usage, allowing cardholders to earn points, miles, or cash back. Programs are structured in two primary ways, determining where rewards reside.

Bank or issuer-specific points programs are managed by the issuer (e.g., Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Rewards, Capital One Venture Rewards). Points are held in a bank-managed account and can often be pooled across multiple cards with the same issuer. These points offer flexibility for redemptions like travel, merchandise, gift cards, or statement credits.

Co-branded programs partner an issuer with an airline, hotel, or retail brand. Rewards are earned directly into the partner’s loyalty program (e.g., Delta SkyMiles, Marriott Bonvoy). Once earned or transferred, these miles or points reside with the loyalty program, not the bank. This distinction is important for understanding how cancellation affects rewards.

Implications for Your Rewards Upon Cancellation

The fate of rewards upon cancellation depends on the program type and issuer policies. If rewards are held solely by the issuer and tied to the canceled card, they may be forfeited if not redeemed or transferred.

For bank-specific points, the outcome depends on your issuer relationship. If the canceled card is your only account with an issuer, unredeemed bank-specific points are likely lost. For example, American Express Membership Rewards points are generally forfeited if you cancel your only card earning them and lack another eligible American Express Card or Checking account.

However, if you have other active cards with the same issuer participating in the same program, points often pool and may be retained. For example, Chase Ultimate Rewards points can often be transferred to another Ultimate Rewards-earning card you or a household member holds before cancellation to prevent forfeiture.

With co-branded airline or hotel miles and points, the situation is more favorable. If these miles or points have already been transferred to your airline or hotel loyalty program, they reside with that program and are not affected by card cancellation. For example, Delta SkyMiles or Marriott Bonvoy points earned on a co-branded card remain in your loyalty account even if the card is closed. However, any untransferred points still held by the bank (e.g., recently earned rewards or sign-up bonuses not yet posted) could be lost if not transferred before cancellation, depending on the card’s terms.

Cash back rewards are handled differently. Cash back may be automatically credited or issued as a check upon closure, but some issuers might require a final redemption. For example, Discover sends a check or credits your account if closed. Confirm the exact policy with your issuer before cancellation.

Strategies to Retain Your Rewards

Proactive steps before canceling a credit card can safeguard rewards. One approach is to redeem all accumulated points or miles. This could involve using them for travel, cash back, gift cards, or merchandise, ensuring value extraction before account closure. This ensures rewards are no longer held by the issuer, protecting them from forfeiture.

For bank-branded points with transfer partners (e.g., airlines, hotels), transferring points to a chosen loyalty program is another strategy. Once points are transferred to a partner loyalty account, they are secure from card cancellation as they fall under the partner program’s terms. Confirm transfer ratios and minimum thresholds before initiating this process.

Consider a product change, converting your existing card to another within the same issuer’s portfolio. This can often retain points without closing the account, especially if switching to a no-annual-fee version earning the same points. Some issuers may also allow combining or transferring points to another existing credit card account you hold with the same issuer.

Before cancellation, contact the credit card company directly. A representative can clarify their points retention policy and discuss options. They may offer retention incentives.

Additional Considerations When Closing a Card

Canceling a credit card has financial implications beyond rewards. One aspect is the potential impact on your credit score. Closing a card can affect your credit utilization ratio (credit used vs. total available credit). If a substantial credit limit is removed, your utilization ratio may increase, negatively affecting your score.

The average age of your credit accounts is another credit scoring factor. Closing an older credit card can reduce the average age of your credit history, potentially impacting your score, especially if it was a long-standing account. Credit mix (types of credit) also plays a role, though closing one card may not significantly alter this if other revolving accounts remain open.

Canceling a credit card does not eliminate outstanding debt. You remain responsible for paying the full balance, and payments must continue as scheduled. Interest accrues on any remaining balance until paid in full.

Annual fees are another consideration. Some issuers may offer an annual fee refund if you cancel within a grace period (typically 30 days after the fee posts), but this is not guaranteed and varies by issuer. Timing your cancellation before an annual fee posts can help avoid this charge. Finally, update any recurring charges or subscriptions tied to the canceled card to prevent service interruptions or missed payments.