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Sunday Reader Question: Do I Lose Points if I Cancel a Credit Card?

by on January 1, 2012 · 15 comments

in American Express, Credit Cards, Sunday Reader Questions

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Happy 2012! If you haven’t done so already, today is a great time to assess your points strategy and chart goals for 2012. I’ll be blogging about my strategy this week, which will involve closing and opening some new credit cards.

On that topic, TPG reader Bill writes:

“I just passed my anniversary date on my American Express Premier Rewards Gold card at the beginning of December and I was charged the $175 annual fee. I know I still have about 15,000 MR points pending, which have not yet posted to my account. As of today, I have 99,000 Membership Rewards points posted and available.

With that in mind, I would like to either cancel the card or downgrade to a card without an annual fee in order to save me from paying the full $175 dollars.

So my question is, if I cancel or downgrade, will I forfeit my current points (the 99k) as well as the pending points? Will I need to transfer everything out at this point before canceling or downgrading? (the thing is that I’m not really sure where I would want to transfer those points to). Any suggestions as to how to best approach the situation?”

As a general rule of thumb, I recommend using or transferring points from any credit card points program if you are going to cancel the card. As far as airline and hotel branded credit cards, those points earned go directly into your personal frequent flyer/guest account, so you don’t need to use them when you cancel the credit card (my only advice is to keep the card open for at least 6 months because the card companies may take back the points earned if you cancel too soon).

In your situation, I’d first call American Express and ask them to post your pending points. As long as your bill is paid they should be able to do that as a courtesy. I’ve done it on many occasions and never had an issue.

As far as switching to a card with no fee, there isn’t a Membership Rewards card with no annual fee that will still allow you to transfer your points to airlines. You can switch to the no annual fee Amex Blue card, however your points will only be able to be used for gift cards/travel at 1 cent per point. However, at a later time you can upgrade back to a full-fledged Membership Rewards card like the Platinum or Gold card, those points will then become transferable again to airlines. This works even if you’ve always had the Blue card and then upgrade to a premium card – all of those points become transferable, which in my opinion is where the real value is with Amex points – especially if you know how to take advantage of transfer bonuses like the current British Airways and Delta 30%  offers.

Amex points are valuable because you can use them when you need them, so by preemptively transferring them you lose that flexibility to top up your frequent flyer accounts. However, Amex will prorate your annual fee, so if you decide to use those points and cancel your card, you will get most of that $175 annual fee rebated to you.

Opening and closing credit cards does have an impact on your credit score (though generally much less than most people think), so check out the following related posts: Video Blog Post: When Should I Cancel My Credit Card?, Understanding How Your Credit Score Works.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • DavidAL

    If you just paid your fee in December, there is no reason to cancel before next November. It won’t save you and money to cancel now.

  • Anonymous

    Thats not true- if you cancel you get a prorated refund of the annual fee

  • Matt Adams

    This true for all the big guys (citi, chase) or just AMEX?

  • Brian(J)

    Yet another timely subject as my AMEX Gold fee comes due in two months, and it is a card I just don’t use, now that Chase Sapphire and Ink Bold have lured me away. I am looking to close that account and save the $175.
    Question: I am finding it very difficult to decide where to transfer (park) the AMEX Points. Don’t much like any of the options, AVOIS I have too many of now, SPG they get devalued 3 to 1, Delta is a program I have nothing in. UA is what I would like but can’t get there. Any suggestions?

    What I am doing is stalling and hoping to see an upgrade to Plat with a 50K bonus.

    Thank you.

  • Macooke53

    Can I cancel my business BA Chase Visa and not lose the AVIOS miles that have been posted already to the account? I can’t cancel my regular BA Chase Visa until I use my companion certificate by 2013. I was able to use my last companion certificate for a trip for 2 to Italy this March for only fees plus 45,000 miles total during their 1/2 price mileage promo, but only for “economy plus”!

  • Anne

    Another new year question. I received one day passes to a lounge at an airport, but it’s not the airlines I’m flying next. Do they ask for your itinerary when you enter the lounge? In other words, can I relax in the America lounge when I’m going to fly out on UA?

  • Caroespecial

    What bout the the Amex Green Card, isn’t the first year free ?

  • David

    No, sorry

  • PJ

    I kept the avios posted to my BA Executive accounts after i said adios to BA card when Chase gave me Sapphire Preferred and asked me to turn in one chase card I had.

    hmmm I did not get my prorated membership fees.

  • PJ

    to me it is silly for AMEX to have 3 to 1 MR to a SPG points.. it is silly to use avios to fly EWR SNA for 17.5 K while AA 12.5 K .

    I did get to tranfer into AEROPLAN with 25% bonus ie 21 K MR= 25 Aeroplan and can turn around and book United Flights with a nonimal surcharge on EWR-SNA routes.

  • Stm69

    So PRG can => Blue. What if 1) you already have a blue and 2) are there options for a gold business card for non-fee options?

  • Anonymous

    Sorry, but David is most likely wrong. Check out the terms on your day pass. I’ve had day passes with AA and Delta and both have said:

    “One-day pass visitor must hold a same-day ticket for airline travel that allows clearance through security for flight departure and access to the Admirals Club/Sky Club location.”

    It says nothing about what airline, it just says you need to be flying out of that airport and have access to the terminal the Admirals Club is in.

  • http://www.corfu-villa.com jason_corfu_villa

    The fee is there to make up for them giving you points. You get nothing for nothing these days!

    But try speaking to Amex! Good luck!

    And please let us all know how you get on please!

  • Walt K

    You can’t switch from Amex charge products to revolving products, at least not in my experience. You can fill out a new application for Blue, or if you already had Blue, you could use that to retain the points as MR Express points, but you’re not going to be able to do a product change to Blue, or from Blue to PR Gold.

  • Walt K

    FWIW, I got a 50K upgrade offer the month after my PR Gold fee was paid.

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