Step-by-Step Guide: Getting Rid of a Credit Card

Like any other airline or hotel points, you just have to make sure to keep your airline or hotel account active. Without the credit card, there is an increased risk that your account will eventually become inactive. So, you'll want to keep an eye on any airline or hotel account where you have a lot of points and not a lot of recent activity. Keep Your Points from Expiring.

If the card earns cash back, make sure to cash out before you cancel. With most cash back credit cards, you need to take a specific action to cash out the value of your accumulated balance. If the only way to get good value from your points is to use them to purchase travel (or to offset travel purchases), things are more complicated. You'l need to start planning to cash out your points further ahead of time, so that you have a good opportunity to use them for travel purchases. Southwest Airlines lets you easily cancel flights without an added charge, and receive a travel credit. So, if you are desperate to use your points, you can sometimes book a Southwest flight and then cancel it. A few days later, your points will be transformed into a Southwest travel credit.
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 your points. Depending on the card, you have four options:

Make sure to 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 credit cards, nothing will happen to your points. If you have the option to freely transfer your points to another person, only one of you needs to keep a qualifying card. The rules are different for each credit card company, so see the details in the box below.
Instead of cancelling your card, "downgrade" it to a no-annual-fee card. Most credit cards can be converted into a different card from the same credit card company. If you convert into a no-annual-fee card, you'll be able to keep your points, without needing to spend money each year. Check the box below for more details about each program's options.
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. You’ll lose some flexibility, but you can safely cancel all your cards from that bank.
If you don't find the other options appealing, you can usually just use your points to buy gift cards. Or with some cards, purchase some travel through the credit card company's website. You'll get less value from your points, but it is easy way to close out your account.

Note that if your points do expire, you can always call the credit card company and plead for them to return the points to your account. Sometimes that works, but you are better off just following the rules, and making sure it doesn’t happen in the first place.

Rules for Different Credit Card Companies

Chase Ultimate Rewards	You need to hold onto at least one card that earns Ultimate Rewards points, or you will forfeit your points. 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 the 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 the add their partner as an authorized cardholder on one of their cards). Unfortunately, Chase doesn't offer any no-annual-fee cards which still allow you to transfer your Ultimate Rewards 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, 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. However, down the road, you can convert back to an annual-fee based card (or transfer them to a new card) and regain the more valuable redemption options.
American Express Membership Rewards	With Membership Rewards, all your credit cards should be part of a single Membership Rewards account. To keep your points from expiring, you just need to keep at least one card that earns Membership Rewards. Like with Ultimate Rewards points, you can freely transfer your points between authorized card holders, allowing a couple to keep a single card between them. 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 card (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 that the card you are cancelling is indeed linked to the same Membership Rewards account as the card you are keeping (like it should be). For example, before you cancel, you might need to call to get a business card linked to the same account as your personal cards.
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 account will expire 60 days later. You can transfer them to another account holder instead, but that only extends the deadline till 90 days. You can, however, downgrade the card, and hold onto the points. The AT&T Access or ThankYou Rewards+ card are two good no-annual-fee options. Doing this 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 the annual fees.
Barclays Arrival Miles	Barclays only has a single current 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 that you need to make, or to 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 converting the Diners Club Elite Card to the Premier Card, in order to pay a lower annual fee.
U.S. Bank FlexPerks	You may be able to downgrade the Gold FlexPerks Amex to the Select+ Amex. You can transfer up to 20,000 FlexPoints per year to or from another person. This may help, but the annual limit may prevent you from moving all your points. The points from this program will expire 5 years after you’ve earned them, even if you still have the card.
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. You can transfer points to other people, allowing a couple to keep one only a single card. 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.

When to cancel

Guidelines for cancelling a card

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.
Wait until the end of the first year to cancel a card. Banks don’t like to see their cards being cancelled right away, and there isn't much reason to cancel it before you need to pay the next year's annual fee (if any). In addition, cancelling early limits your ability to negotiate with the bank during a future reconsideration call.

Even the cards you don’t plan to keep may have some nice-to-have benefits, that you can take advantage of, at no extra cost, for the entire first year, and even the beginning of the following year. You might as well take advantage of the benefits when you can.

It is especially important to be 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 down too early, they may take back your signup bonus. After about 4 months you should be fine. Real experts can sometimes ignore this rule. But, we still usually recommend that you hold onto the card until the end of your first year.

It is also 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 don't hold onto new cards for a full year. Wait to cancel until you receive the statement that includes your annual fee. You'll still receive a full refund.

Consider "downgrading" your card instead of cancelling it. Many credit cards can be converted into a related no-annual-fee card. For example, the Citi Prestige card can be converted to the Citi Rewards+ card, the Aadvantage Platinum card can be converted to the MileUp card, and the Hilton Surpass card can be converted to the plain Hilton card.

It doesn't cost anything to hold onto one of these no-annual-fee cards, you've already used an application "slot" to get the original card, and the new card usually has at least some useful benefits. In addition, if you want to convert back to the "regular" version, you typically won't need to go through the approval process (and generate another credit inquiry). You might even receive an "upgrade" offer to change back. If you need to eventually free up some of your credit limit, you can always cancel the new card at some point in the future.

When you downgrade your card, you won't receive the new card's signup bonus points (if any), you just get to take advantage of its benefits. You can't change between a personal and a business card or vise versa, and you shouldn't (and often can't) convert a card during first twelve months after you get it.

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 the once-in-a-lifetime signup bonus with that card. 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.

But, 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.

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).

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 cards and the Ultimate Rewards business cards, and there soon will be one for the Marriott cards. You'll need to pay a fee to hold onto an IHG, 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.

Citibank. Since Citibank resets the 24-month clock for receiving signup bonuses when you cancel your card, it can be helpful to downgrade your card instead. As long as the number remains the same, it won't reset the clock for earning your next signup bonus.

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. If there isn't a specific Citibank card you want, a good option is to downgrade to the discontinued Citi Dividend Card. Like the Chase Freedom card, it has no annual fee, a high reward rate on a set of rotating bonus categories, and no restriction on having multiple copies.

Bank of America. As with Citibank, you don't need to downgrade your Bank of America cards to the another card in the same credit card 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 are usually better off just cancelling your card. If you convert to another card and don't use it regularly, it hurts your chances of being approved for a new Barclays card.
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.

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). At some point, you may also want to shut some of these accounts to lower your overall credit limits.
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.
If you are using the card for automatic bill payments with some merchants, 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. Before you cancel, make sure to switch these to another card, .
Make sure you don’t lose out on use-it-or-lose it annual benefits. Some cards have an annual credit for travel or airline incidentals. If you haven’t used these yet, you should try to do so before cancelling your card.
(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.

Getting Your Anniversary Bonus (Just Before You Cancel)

Many credit cards give you a special benefit every year. For example, the Chase Sapphire reserve gives you an annual $200 travel credit and the IHG credit card gives you an annual free night certificate.

You can often receive the upcoming year's benefit, even if you are cancelling your card. That is because most credit card companies will refund the annual fee, as long as you cancel within the first month or so from when the fee is posted to your account.

In the case of a travel or shopping credit, simply make an effort to quickly use the next year's credit before you cancel the card. In the case of a hotel or companion certificate, you can sometimes wait to cancel until after you've received your certificate. Other times, the certificate doesn't arrive until it is too late to get an annual fee refund. Once the certificate is attached to your hotel or airline account, it won't disappear when you cancel your card. Details on specific credits and certificates are available in each credit card's guide.

Check this page on Doctor of Credit for a current list of annual fee "rebate" rules. At this time, Chase, Amex, Citibank, Barclays, Capital One, U.S. Bank and Wells Fargo will all refund your fee if you cancel shortly after it posts. Bank of America sometimes does, but sometimes doesn't. But, you need to be careful with credit cards from less common banks, which often don't have grace periods.

If you DOWNGRADE an Amex or Citibank card after the free cancellation window, they will still prorate the annual fee. You'll get some of the annual fee back and still get to keep any benefits you've already received. Once you've downgraded your Amex card, you have 30 days to cancel the downgraded card and receive a refund of the new card's prorated annual fee.

For example, if your Hilton free night certificate doesn't post fast enough, and the window for getting the full annual fee refund has passed, you can wait till the certificate arrives, and then downgrade your card to the no-annual-fee version to receive a pro-rated refund of most of the annual fee.