Step-by-Step Guide: Getting Rid of a Credit Card
When to cancel
Banks don’t like when you cancel their cards right away. And there usually isn't much reason to cancel early anyway. Once you've paid the fee, you might as well take advantage of any benefits for the entire year.
If you are not planning on holding onto the card for the long run, you want to make sure to get rid of it before you are on the hook to pay the next year's annual fee, but you shouldn't get rid of it any sooner.
Be very careful about cancelling a card in the first few months. It may take some time before you receive your signup bonus and you want to avoid canceling until it is safely in your account. Some cards have terms and conditions that specify a minimum amount of time that the account must be open. If you close it too early, they may take back your signup bonus. After about 4 months, you should be fine.
- It is particularly important to avoid cancelling Amex cards in the first year. Amex is probably the most useful credit card company and REALLY doesn't like people who hold onto new cards for less than a year.
- Amex, Barclays, Chase, Citibank, and U.S. Bank will refund your annual fee if you cancel within 30 days of when the fee shows up on your credit card statement. You should wait to cancel until after the fee shows up. That will keep the bank happy and possibly let you take advantage of some of the next year's annual benefits. Policies can change at any times, so be sure to check online before counting on getting your fee back.
- With other credit card companies, you'll need to cancel just before the fee shows up. Some banks in this category include Alliant and HSBC. If you wait until the annual fee is charged, you won't get an "automatic" refund. It can be hard to know exactly when to cancel. We recommend a little after 11 months from when you receive the card. If you wind up being too late, try calling in and see if they'll waive the fee.
- Bank of America and Capital One will usually refund the fee, but you can't count on it. It is probably better to cancel ahead of time.
- With smaller banks, it is safer to assume that you need to cancel before you the annual fee shows up on your statement.
With Amex, Chase, and Citi, you can also "product change" the card, at any time, to get a pro-rated refund. So if you want to keep the card for a few extra months or you decide to cancel partway through a year, and there is a free or lower priced card you can change to, you'll only pay part of the regular fee.
Many credit cards give you a special benefit each year you have the card. For example, the Chase Sapphire Reserve provides an annual $200 travel credit and the Hilton Aspire card provides an annual free night certificate.
If you time things right, you can receive the upcoming year's benefit even when you are cancelling your card.
- If you can cancel just after the annual fee posts, you may be able to squeeze in an opportunity to use any anniversary-year credits. For example, if you are getting rid of the Chase Sapphire card, you could take advantage of the next year's $200 travel credit during the month before you need to cancel to card.
- You often CAN'T take advantage of free night or other certificates during this extra month. Credit card companies are smart enough to wait more than a month before they actually give you your new certificate. For example, you won't receive your Marriott free night certificate until weeks after your annual fee posts, too late to simply cancel and get your annual fee back.
- However, with Amex's, Chase's, and Citibank's cards, you can usually take some extra time if you need to. Instead of cancelling your card right after the fee posts, you can keep it open for a while and then get most of your annual fee back by downgrading it to a no-annual fee or lower-priced card. For example, you can wait two months to receive your next year's free night certificate and then downgrade your Hilton Aspire card to the no-annual-fee Hilton card.
Specific suggestions for each card are included in the "Cancelling Your Card" section of its credit card guide. Credit Card List (By Bank).
Don't lose your points
You’ve gone out of your way to earn points with your credit card—you don’t want to lose them before you get a chance to use them. Fortunately, it is usually straightforward to make sure that you hold onto your points when you want to cancel a credit card.
- You want to make sure all your purchases have had a chance to post and qualify for rewards. In some cases that means that you need to wait for your your statement to close. Try to plan ahead of time, so that you don't need to choose between missing out on some points and keeping the card open past the deadline.
- If your credit card earns frequent flyer miles or hotel points, you won't lose previously earned points when you close your card. The points are deposited directly into the airline or hotel's loyalty program. Cancelling the credit card won't have any effect on your existing points (or certificates).
- If the card earns cash back, make sure to cash out before you cancel. With most cashback credit cards, you need to take a specific action to receive the value of your accumulated balance.
- If the points can be used to "erase" a travel purchase, you can easily make a refundable reservation. You'll need to find a prepaid, but refundable, reservation so that the charge immediately shows up on your statement. Among other possibilities, some hotel reservations and most AirBnB reservations work this way and you can freely cancel most US-based flight (receiving a travel credit). After you apply the points to the charge, simply cancel the reservation.
- If the points only provide good value when used to purchase travel through the bank's website, try to use them for a reservation before you cancel. It is best to use them at your first opportunity during the year, so you won't have a significant balance when it is time to cancel your card. If not, you hopefully will have an opportunity to use them to book a future trip, even one that is happening after you cancel your card. Otherwise, you might be able to take advantage of some of the other options listed below.
- If the credit card earns points as part of the credit card company’s own rewards program, you'll need to be more careful. If you simply cancel your card, you could lose any remaining points. There are four basic approaches you can take, although not all of them are available for every card.
Like with any other airline or hotel points, you just need to make sure to keep your airline or hotel account active. Without the credit card, there is an increased risk that you'll go a long time without earning any points, so make sure to keep an eye on your loyalty accounts. Keep Your Points from Expiring.
Rules are different for each points program, so make sure to look at the program-specific information below.
- 1. Hold onto at least one credit card that earns the same type of points. With most credit card programs, as long as you have at least one of their program's cards, nothing will happen to your points. In some cases, a couple could keep only a total of a single card between them, by transferring their points to the other person.
- 2. Instead of cancelling your card, "downgrade" it to a no-annual-fee card. Most credit cards can be converted to a different card in the same points program. If you convert into a no-annual-fee card, you'll usually be able to hold onto your points, without needing to continue to pay any annual fees.
- 3. Transfer your points before you cancel. For points that transfer to airline and hotel partners, you can transfer your points to the partner you are mostly likely to use later. For example, you could transfer your Chase points to Hyatt or United Airlines, where they will be safe. You’ll lose some flexibility, but you won't need to hold onto any Ultimate Rewards cards.
- 4. If you don't find the other options appealing, you can often just use your points in some other way. You might be able to buy gift cards or purchase travel through the credit card company's website. You'll often get less value from your points, but it is most direct way to close out your account.
Some cards have an annual credit for travel, airline incidentals, or other purchases. If you haven’t used these yet, you should try to do so before cancelling your card.
Rules for different points programs
- Chase Ultimate Rewards. With Chase, each card has its own points balance. Before you cancel an Ultimate Rewards card, you'll need to transfer any points associated with that card to an Ultimate Rewards card that you are keeping. Since you can freely transfer points between authorized card holders, a couple only needs to keep a single card between them (assuming they add their partner as an authorized cardholder on one of their cards).
- American Express Membership Rewards. With Membership Rewards, all your Membership Rewards cards should be part of a single account. To keep your points from expiring, you just need to keep at least one card that earns Membership Rewards.
- Citibank ThankYou Points. Citibank is the most problematic program. While you can combine your points into a single account, each point is still associated with the card (or banking account) that earned it. If you cancel your card, any points that you earned from that card will expire 60 days later. You can transfer them to another account holder instead, but that only extends the deadline to 90 days.
- Bank of America Points. You'll lose your points if you cancel your card. However, points can be freely transferred to another rewards card or to a friend or family member. If you have the Premium Rewards card, points can be transferred out as cash.
- Capital One Points and Miles. You'll lose your points if you cancel your card. However, points can be freely transferred to other cards or to a friend or family member. Unfortunately, you can't move your points between "point" cards and "mile" cards. Avoid redeeming your points for cashback, but you can easily redeem them to cover any travel purchases you make with your card, book travel, or buy gift cards. "Miles" can also be transferred to airline programs.
- Barclays Arrival Miles. Barclays only has a single card that earns Arrival miles and you will lose your miles if you cancel the card. Your best option is to use your points to pay for some travel expenses or make a refundable reservation before you cancel your card.
- Diners Club Rewards. Diner’s Club works like American Express, the points from multiple cards should all be based on a single account and you must keep at least one card to keep your points. Unfortunately, they don’t have any no-annual-fee cards, so the best you can do is covert the Diners Club Elite Card to the Premier Card and pay a lower annual fee.
- Wells Fargo GoFar Points. Like American Express cards, all your Wells Fargo cards should be earning rewards in a single account and you only need to make sure that you continue to hold onto at least one card to keep your account alive. You can transfer points to other people, allowing a couple to keep one only a single card.
Unfortunately, Chase doesn't offer a no-annual-fee Ultimate Rewards card which also allow you to transfer your points to airline and hotel partners. If you want to maintain the full value of your points, you are on the hook to pay the annual fee for one of the Chase Sapphire cards (or the Ink Preferred card).
Alternatively, you can get (or convert to) the no-annual-fee Chase Freedom Flex, Freedom Unlimited, Ink Cash, or Ink Unlimited card. You’ll hold onto your Ultimate Rewards points without needing to pay an annual fee, but you will only be able to redeem them for a limited number of more cash-like options (at 1 cent per point) rather than using them for award tickets and hotel nights. Down the road, you can convert back to an annual fee based card (or transfer them to a new card) to regain the more valuable redemption options.
Ideally, you want to keep a card that also includes the ability to transfer points to hotel and airline partners. Fortunately, you can get (or convert into) the no-annual-fee Amex EveryDay Ccard (or Blue Business Card) for this purpose. Note that some Amex cards are classified as “credit cards” and some are classified as “charge cards”. You can’t downgrade a card from one category to the other.
You shouldn’t need to transfer points between cards before you cancel. However, you want to make sure your cards are linked together like they should be.
You can, however, downgrade the card and hold onto the points. The ThankYou Rewards+ card is a good no-annual-fee option. Converting the card will let you keep the points you earned, but you WON’T be able to transfer them to hotel or airline partners. If you want to continue to be able to transfer your points, you’ll need to hold onto (or convert into) the Premier or Prestige cards and continue paying an annual fee.
While the points from the Double Cash Card can be converted into ThankYou points, it isn't considered a ThankYou points card. If you downgrade a Premier or Prestige Card to the Double Cash card, your points will still expire.
You'll want to hold onto the no-annual-fee Visa Signature card because it gives you the option of using your points at 1.5 cents each to purchase airfare through Wells Fargo. GoFar points will expire five years after you’ve earned them, even if you still have the card.
Consider "product changing" your card instead of cancelling it
Most banks let you convert a card into another one of their credit cards, at least within the same family. This is called a "product change". Most often, people "downgrade" a card with an annual fee into a card without one, but it is also possible to "upgrade" to a more expensive card.
- If you are no longer interested in a card, there are several possible advantages to "downgrading" it rather than cancelling it.
- In many cases, it can ensure you keep your remaining award points. As discussed above, as long as you have at least one card in most bank-run rewards programs, you'll maintain access to your points. Rather than cancelling your last card, you can convert it to a free or less-expensive one and you won't need to take any alternative steps to take care of your points. Even with Citibank's ThankYou program, if you convert a ThankYou card to another ThankYou card, you won't lose access to that card's points.
- It is often the best way to get a card that has a low signup bonus. There is an opportunity cost to every card you sign up for. If a card you want has a low signup bonus, you may be better off getting a related card with a better bonus. At the end of the initial year, you can convert it to the card you wanted for the long run. For example, if you wanted the Bank of America Cash Rewards, rather than getting it and its $200 bonus, you could sign up for the Bank of America Premium Rewards card with a $500 bonus, and then convert it to the Cash Rewards card after a year.
- It can let you retain some of the benefits of a card you no longer want to pay for. For example, if you no longer want to pay for the regular Bonvoy Boundless Card, you could convert to the no-annual-fee Bold version and still receive your 15 elite night credits each year; or if you no longer wanted to pay for the regular United Explorer Card, you could convert to the no-annual-fee version and still receive access to extra award space.
- It can sometimes trigger an upgrade offer to switch back. Banks want you to use their annual fee based cards, so they may occasionally offer you a bunch of points to upgrade to another card in the same family. These upgrade offers bypass the bank's normal approval limitations. This can be one of the best ways to earn points from an American Express card that you've already had before and is very common for Amex's Hilton and Green / Gold / Platinum families.
- It is often the only way to get multiple copies of the same card. Banks will almost always allow you to product change to a card you already have, even if they wouldn't approve you to sign up for another copy. Some credit cards, like the Chase Freedom Flex and Bank of America Cash Rewards cards, earn valuable rewards that are "capped" to a certain dollar amount each quarter. If you have more than one of these cards, you'll increase the maximum amount of bonus points you can earn each year
- It is often the only way to get certain "discontinued" credit cards. When a bank is no longer interested in offering a credit card, they often let existing cardholders continue to use the card. Sometimes, they will even let people product change to it. For example, it has been a long time since you could apply for a new Ritz Carlton card, but you can still product change to it from the Chase Marriott cards; and even though Amex no longer allows you to apply for a non-Premium Marriott card, you can still downgrade the Bonvoy Brilliant card to the old Amex Marriott card. Sometimes, your best product change option is a card that is no longer available for new signups.
- It can hold open a "slot" to get a new card later. If you start collecting signup bonuses, you'll likely be blocked from getting new Chase cards by the Chase 5/24 rule and from new Bank of America cards by their similar rule. It might also be hard to get approved for cards from some other banks that are sensitive to the number of recent cards or inquiries. If you downgrade a card instead of cancelling it, you can product change back or to a different card in the future, without needing to go through the normal approval process.
- It keeps your credit utilization low, by maintaining your current credit capacity. It's also helpful for your "average age of accounts", especially if you've had the card for a long period of time.
- With a product change, you won't receive the new card's signup bonus points (if any). You just get to take advantage of its ongoing benefits. If you are collecting signup bonuses, you don't want to product change to an Amex card you've never had before, as you'll miss out on your "once in a lifetime" chance to earn its signup bonus.
- You can sometimes convert to a card that isn't advertised on the web. Along with the discontinued cards discussed above, banks sometimes have "secret" no-annual-fee versions of their popular cards. If you want to keep a card slot and avoid paying a fee, make sure to call and ask them if you could convert it to a "no annual fee" version, even if you aren't sure one is really available. Sometimes they'll say yes, sometimes they'll simply waive the fee on your current card, and sometimes you'll need to make a different choice.
- You usually can't convert a card during the first twelve months. There are some regulatory restrictions on product changes that cause many banks to simply avoid making any changes during this time.
- You can never product change between a personal and a business card, in either direction, even if they are both in the same family.
- Many banks limit you to product changes within the same family, but a few banks will let you product change to any of their cards. For example, with Chase you can only convert one of the Southwest Airlines cards to a different Southwest Airlines credit card, but with Citibank you could convert an American Airlines card to a Citi Prestige card.
A special case of this is when you want to get an Amex card that you've had before. Due to Amex's once per lifetime rule, you won't be entitled to the signup bonus. As an alternative, you may want to earn a signup bonus from a different card in the same family and then eventually change to the card you really wanted.
For example, if you don't feel you still need the United Airlines card, you could convert it to the no annual fee version. If you decide later that it would be nice to regain its free bag benefit, you can convert back, even if you are well above the 5/24 limit. Of if you decide you no longer want your Alaska airlines card, you might be able to convert to a Bank of America Cash Rewards Card. If, down the road, you decided you wanted the Virgin Atlantic card and were past BOA's limits, you might be able to convert to it from the Cash Rewards Card.
- Amex. Be careful when downgrading Amex cards. If you downgrade to a card you haven't had before, you'll permanently lose your ability to earn its once-in-a-lifetime signup bonus. In addition, due to Amex's limit of 5 credit cards, you are likely to need to eventually cancel the card in order to free up a slot for a new card you want.
- Chase. It is especially useful to convert Chase cards instead of cancelling them. Because of the Chase 5/24 rule, it might be some time before you'll be able to sign up for any new Chase cards. If you downgrade a card, instead of cancelling it, you'll have the option of upgrading it to a some other Chase card you decide you want, even if you normally wouldn't be approved for a new signup (due to the Chase 5/24 rule).
- Citibank. Since Citibank resets a 24-month clock for receiving signup bonuses when you cancel your card, it can be helpful to downgrade your card instead.
- Bank of America. As with Citibank, you can usually product change to any card, not just a card in the same family. If you don't have a specific card in mind, consider the BOA Cash Rewards Card, it has no annual fee and earns 3% back on your choice of categories (such as online shopping). If you have Preferred Rewards status, the reward rate for this card can be as high as 5.25%.
- Barclays. With Barclays, you can only product change between families, but you are usually better off just cancelling your card. If you convert to different card and don't use it regularly, it hurts your chances of being approved for any new Barclays card you may want.
- U.S. Bank. With U.S. Bank you have only a limited ability to convert cards. You can only convert a card into a sibling card. You'll need to call in to see what your options are, as it is not always obvious.
If you've already received the bonus (or it isn't that significant) and you don't immediately need the slot, downgrading is often a good idea. For some cards, such as the Hilton cards, you may eventually receive a generous offer to upgrade the card again. Note that charge cards can only be downgraded to other charge cards, credit cards can only be downgraded to other credit cards, and cards must be converted to other cards within the same "family". For example, you can't convert a Platinum card to a Hilton card.
You can only convert Chase cards to other cards in the same family. If you are converting an Ultimate Rewards card and there isn't another Ultimate Rewards card you want, a good option is the Freedom Flex Card. It doesn't have an annual fee and earns 5x points on up to $1,500 in quarterly spending in a rotating set of bonus categories. It is a good way to get a boost to the credit card rewards you earn each year. You can even have multiple copies of the Freedom card at the same time. Earn 5-10% in Rewards with Rotating Category Cards.
There are no-annual-fee downgrade options for the United, IHG, and Marriott cards and the Ultimate Rewards business cards. You'll need to pay a fee to hold onto a Hyatt or Southwest card. Another potentially interesting opportunity is to convert your Marriott card to the no longer available Ritz Carlton Credit Card to take advantage of its unique set of benefits.
Unlike Chase and Amex, you can downgrade your Citibank card to a card in another family. For example, you can downgrade your American Airlines card to a Double Cash card.
Other guidelines for getting rid of your card
- Download your statements. While you usually can still access any closed accounts, it isn't always possible on every bank's website. To be sure you have any records you need, download your statements before you cancel. We like to keep a separate folder for each year and add the name of the card to the beginning of the filename (if it isn't there already). If we have more than one copy of a card in the household, we add an extra identifier to the statements to make sure each card's statements are grouped together.
- Try to avoid cancelling your “oldest” credit cards. The duration of your longest-held account plays a significant role in your credit report. Try to avoid cancelling this card, unless you have another card that you’ve had for a similar length of time. If your oldest card has an annual fee, which you no longer want to pay, you can usually “downgrade” it to a different no-annual-fee card and still keep the account open. Just call in and talk to a customer service representative.
- There isn’t much reason to cancel a no-annual-fee card. It doesn’t cost you anything to hold onto the card and cancelling might lower your credit score a little. Keeping it for the long term may eventually help with your length of credit history. Wait to close any no-annual-fee accounts until you start hearing regularly from credit card companies that you have too many accounts open (as opposed to too many accounts opened recently) or too much credit relative to your income.
- (optional) When it is time to cancel, try to call in and see what retention offer you can get. Banks want to keep your business and will typically offer to give you more points, or waive the annual fee, to keep you as a customer. This “sweetener” can make it worthwhile to keep the card. Just make sure you've taken steps to preserve your points and understand your different product change options before you call.
- If you are keeping track of your cards, add the cancellation or product change date to your spreadsheet. Keeping track of when you closed an account can sometimes be as important as when you opened it.
- If you are using the card for automatic bill payments, you’ll need to switch them to another card. You might be using your card to automatically make payments with someone like your cable provider.
- (advanced) Lower your credit limit on your Bank of America cards before you cancel them. According to Doctor of Credit, there is a glitch in Bank of America's system where a cancelled credit card will still count against your overall credit limit for another year. If you lower your credit limit before you cancel, you will have more credit capacity at BOA to get a new card.
- (advanced) Consider transferring your credit limit to another card from the same bank. Usually you increase the credit limit of another card by a significant fraction of the limit of the card you are about to close. This keeps your credit utilization low. On the other hand, if your credit limit is high, you may want to lower your overall credit to make it more likely to be approved for other cards.
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