A checklist for cancelling credit cards

Before cancelling a credit card, especially a rewards earning card, there are a few steps you should take…

checklist

1. Stop using the card well before cancelling

If you have used your rewards card for any purchases since the last statement close date, then you are due additional rewards for that spend.  If you cancel the card now, you won’t get those rewards.  Consider waiting until you’ve earned the expected rewards before cancelling.

2. Check for other pending rewards

Many credit cards offer annual bonuses. Several hotel credit cards offer free night vouchers. Some hotel and airline cards offer annual bonus points. Some cards offer certificates for free lounge access or other perks.  In most cases, it is possible to get those benefits around the time that your annual fee comes due, but still cancel and get the annual fee reimbursed (if it was already paid).  If you’re expecting benefits like these, wait until you’ve received the benefit before cancelling your card.

3. Keep or cash out rewards

With hotel and airline credit cards, you do not have to fear losing your rewards when you cancel your credit card: your existing points are tied to your hotel or airline loyalty account not to your credit card account.  Many credit cards, though, offer bank-specific rewards that you will lose if you cancel your account.  With cash back cards, simply make sure to redeem all expected cash back before cancelling.  If your rewards are in the form of points that can be redeemed for gifts or travel, though, you might not want to cash in those points since you can usually get better value for travel.

With most such programs, you can downgrade to a no annual fee version of the card in order to keep your points alive.  Each program, though, has different specifics.  Here is what I recommend with a few popular points programs:

  • Chase Ultimate Rewards: Transfer points to another Ultimate Rewards account (either your own or your spouse / significant other’s) or downgrade to no fee card.
  • Amex Membership Rewards: Open a no-fee EveryDay card to preserve your points.
  • Citi ThankYou Rewards: Downgrade to no fee ThankYou Preferred card.

4. Change automated payments

If you have any bills setup to autopay from this credit card account, don’t forget to change those payments to a different card.

5. Ask about retention offers

Call to say that you’re thinking of cancelling but want to know if there are any retention offers available to you. Make sure they list all available offers. Sometimes they’ll offer one and won’t tell you about another until you have declined the first one.  If the retention offer is good enough, keep the card open.

6. Move credit line to other cards

If you decide to cancel the card completely, and if you have other cards with the same bank, ask to move the credit line to another card.  Different banks have different rules about how much can be moved.

After cancelling or downgrading…

7. Update your credit card tracking spreadsheet

If you sign up for lots of credit cards, its important to keep track of which cards you’ve signed up for, when you signed up, and when you cancelled (or downgraded).

8. File or dispose of old card

Don’t forget about authorized user cards too.

Comments

  1. Sorry this happened, and thanks for the checklist.

    A suggested addition:

    Check flyertalk for retention offers, then ask for one before canceling.

  2. Great Checklist! Do you have a format for your credit card tracking spreadsheet on the site. This is something that would be very useful but I’m not sure how to set this up on my own. .

  3. You also want to move the credit line from the closing card to your other cards issued by the same bank. I forgot to do so with one Amex that I’ve been holding for a long time, and consequently my credit score sank twenty something points immediately.

  4. Also pull any on-line statements from the account in the event there are tax related items you need for filing income taxes before the account is closed. You do not know how much longer you may access to that information.

  5. Hi,

    I just cancelled my BofA Virgin Atlantic card which had a $90 annual fee. The CSR offered me a 5,000 point retention offer. But I figured that (if I did the math right) that would be 1.9% fee on those bonus miles. I know that’s not a whole lot but I figured that I could get those 5K miles elsewhere for hopefully less.

    What are your thoughts about that?

  6. Could you enlighten me on your overall approach or perhaps point me to the right post on your site that explains what I’m about to ask…? Seems that a big part of your strategy is to open lots of different cards with bonus point offers for spending a certain amount in the first few months. Most of these cards have annual fees, so I assume you close them out after the first year which is usually free. Is that the case? I’m also curious how the constant churning of new cards has impacted your credit score. What approach do you take to minimize any negative impacts to your credit?

    • Yes, after a year I usually cancel or downgrade to a no-fee card unless the bank gives me a retention offer that is worth more than the annual fee. My credit score initially improved when I started applying for cards, but it has bounced up and down since while always staying above 750. All of this is explained in my free email newsletter: http://eepurl.com/j_M9n

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