Tuesday, 18 January 2022

Canceling a Credit Card? | Don’t Lose Your Points!

Canceling a Credit Card? | Don’t Lose Your Points!
01 Aug

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 for this channel If you enjoyed this video or found it useful, please hit the "like" button and consider subscribing Also, visit our website and subscribe to our newsletter for travel articles, updates, and contests Until next time, travel safe and travel smart

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