What Happens to Your Unredeemed Rewards When You Close a Credit Card?

Have you ever wondered about the fate of your hard-earned credit card rewards when you bid farewell to a credit card? It's a crucial question, as those unredeemed points, miles, or cash-back can slip away faster than you might think. So, before you cancel your credit card, let's unravel what happens to your rewards.

Types of Rewards Credit Cards: Know Before You Cancel

Firstly, let's categorize the three major types of rewards credit cards: cash-back, co-branded airline and hotel cards, and flexible travel rewards cards. Each comes with its own set of rules and potential pitfalls.

Cash-back Credit Cards: These cards shower you with the simplicity of cash rewards. But do you get to keep them indefinitely if you decide to part ways with your card?

Co-branded Airline and Hotel Cards: Loyalty programs tie the fate of your points or miles to specific airlines or hotels. What happens when you sever ties with these co-branded cards?

Flexible Travel Rewards Cards: Earning points or miles from the bank’s program gives you flexibility in redemption. But does this flexibility extend beyond the lifespan of your credit card?

The Saga of Co-branded Credit Cards and Their Loyalty

With co-branded credit cards, the good news is that your rewards are yours to keep even after you've said your goodbyes to the card. However, there's a catch—be wary of expiration policies and keep your points active.

Flexible Rewards: The Race Against Time

Flexibility comes at a cost. Canceling a credit card that earns flexible rewards often means losing any unredeemed points or miles. Yet, some programs offer a grace period. Here's the clock ticking on major programs like Chase, American Express, Capital One, and Citi.

Cash-back: The Manual Redemption Game

Different rules play cash-back rewards. Unlike the automatic redemption of co-branded and flexible rewards, you must manually request to cash out your rewards. Discover takes the spotlight with its generosity, allowing cash-back rewards to defy closure.

Strategies to Secure Your Rewards

The question now is: How can you prevent the heartbreak of losing your points when you decide to cancel a flexible rewards card? We've got a few strategies up our sleeves:

• Transfer to Partner Travel Programs: Choose loyalty programs wisely and transfer your points before it's too late.
• Open a New Card or Transfer Within Ecosystems: Move your points to another card within the same ecosystem to keep them alive.
• Transfer Points to Someone Else: Sharing is caring, especially regarding credit card points. Some programs allow you to transfer points to other cardholders.
• Redeem for Statement Credit, Gift Cards, or Merchandise: Sometimes, the best redemption is the one that saves your points from going to waste.

Before You Bid Adieu: A Checklist for Smart Cancellations

Closing a credit card is an art. Ensure you've ticked off these tasks before you hit the cancel button:

• Ask for a Retention Offer: Retain your rewards by exploring retention offers that might change your mind about canceling.
• Pay off Your Balance: Clear your balance to avoid lingering responsibilities post-closure.
• Use Available Statement Credits: Make the most of annual or monthly statement credits before saying your final goodbye.
• Redirect Automatic Payments: Avoid hiccups in your monthly bills by updating automatic payments to a different credit card.

The Bank's Hand: What If They Close Your Account?

Sometimes, it's not you but the bank initiating the closure. In such cases, the fate of your rewards can be more uncertain. Learn what happens when the bank decides it's time to part ways.

Closing Credits: Your Rewards, Your Responsibility

One thing is apparent in the complex world of credit card rewards: understanding the terms and conditions is your best defense against losing your hard-earned points. Be proactive, follow the strategies, and ensure your rewards stay securely in your possession. If in doubt, remember this guide. And if you need further guidance, call us at 888-430-2511.