How Can I Avoid Losing My Points When Closing a Card?
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TPG reader David sent me a message on Facebook to ask about transferring points:
“I was thinking of closing my Citi Premier and Amex Premier Rewards Gold cards, but I'm not sure what to do with the points. My initial thought was to transfer to Singapore Airlines, but I don't have a specific redemption in mind. Where should I park my rewards for future use?"
One of the most important steps to take before canceling a credit card is to make sure your rewards won't be lost in the process. That's generally not a problem with co-branded airline and hotel cards, but points linked to bank-sponsored programs (like Citi ThankYou Rewards and Amex Membership Rewards) will disappear with your account unless you find another place to keep them.
As David suggested, one solution is to transfer those points to a travel partner, but which one you choose depends on your location, travel plans and other factors. Travel rewards make a poor long-term investment, so your best options are programs you're likely to use in the near future. For example, if you routinely fly with American Airlines, then transferring your Membership Rewards points to British Airways is a decent option, since you can redeem Avios for flights on American (as well as on other Oneworld partners).
Another important consideration is the expiration policy, which varies widely from one frequent flyer program to another. Delta SkyMiles don't expire, so that's a fairly safe destination for your Amex points. The same goes for JetBlue's TrueBlue program, though the transfer ratio is less favorable. On the other hand, Singapore Airlines miles expire after three years regardless of whether there's activity in your account. Without a specific redemption in mind (even in the long term), transferring to KrisFlyer isn't a great option.
Finally, there are some programs to avoid even if they fit with your travel plans, since they don't offer good value for your transferable points. For example, both Citi and Amex transfer to Hilton HHonors at a ratio of 2:3. However, HHonors points are worth only about 0.5 cents apiece on average, so you can expect to get around 0.75 cents of value in return for each point you transfer. Given that you can redeem ThankYou points directly for travel at a rate of 1.25 cents apiece, you'd be sacrificing a lot of value by transferring to Hilton.
If you're concerned about paying annual fees, another option is to downgrade your card instead of canceling it altogether. As the Premier Rewards Gold Card from American Express is a charge card rather than a credit card, your downgrade options in this case are limited. You could downgrade to the Amex Green card, dropping the annual fee to $95, or you could sign up for the Amex EveryDay Credit Card (linked to the same Membership Rewards account) — it's one of the best no-fee cards out there, and still allows you to transfer points to Membership Rewards airline and hotel partners.
Meanwhile, with Citi, you can downgrade the Citi Premier® Card to the Citi ThankYou Preferred Card. You'll lose the ability to transfer points, but you can still share them freely with other ThankYou Rewards members. If your travel companion has the Citi Premier or the Citi Prestige Card, you'd effectively be able to transfer points to travel partners when the time suits you. If not, at least you'd keep your ThankYou points alive without having to transfer them prematurely.
For more information about closing cards and maximizing points transfers, check out these posts:
- Should I Cancel a Credit Card if I Don't Use It Anymore?
- Redeeming Citi ThankYou Points for Maximum Value
- Redeeming Amex Membership Rewards for Maximum Value
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