Do I Lose My Rewards When My Credit Card Closes?

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You generally won't lose airline miles or hotel points if you cancel or close a co-branded travel credit card. However, if you've earned points in the card issuer's rewards program or cash back, you might lose those rewards when you close your card.

What Happens to Your Rewards if You Cancel a Credit Card?

What happens to rewards when a card is canceled will depend on the credit card's terms, the card you have and the reason for the card being closed. Rewards won't be impacted if they've been accruing in a separate frequent traveler program, but closing a general rewards card might cause you to lose your rewards or have to use them within a certain period before they expire.

General Rewards Cards

General rewards cards may offer you cash back or points in the card issuer's rewards program. In either case, the rewards may accrue within your credit card account or the credit card issuer's rewards program—sometimes, you actually earn "cash back" as points in the card issuer's program.

You may be able to redeem cash back rewards by requesting a check, statement credit or money transfer to a linked bank account. With rewards programs such as American Express Membership Rewards, you'll often have a long list of redemption opportunities, including cash back, travel, merchandise and gift cards.

As your rewards are managed by the card issuer, closing the credit card could result in losing the rewards. However, you'll often have a small window of time when you can redeem your rewards after closing your card—it depends on the card issuer's rules and card's terms.

Airline Credit Cards

With airline rewards credit cards, the miles or points you earn may be automatically deposited into your frequent flier account. Terms apply. As a result, even if you close your credit card, you won't lose the miles that are already in your account. However, review the frequent-flier program's rules, as your miles may expire for other reasons, such as if there isn't any activity in your account.

Hotel Credit Cards

Similar to airline credit cards, with a hotel credit card, the points you earn with your credit card will go into your hotel loyalty program account. If you close your credit card, you won't necessarily lose those points. However, hotel program points can also expire due to inactivity.

The Exceptions

While you generally have a grace period when closing general rewards cards, and you'll keep miles or points after closing a travel card, you want to be aware of the exceptions. The credit card company may close your account and you could immediately lose your rewards if, for example:

  • Your account is past due
  • You file for bankruptcy
  • You don't comply with the rewards program's rules
  • The card company thinks you gamed the system

If you have an airline or hotel card, the card issuers may "clawback" the miles or points from your frequent traveler program. And, even if you've already redeemed them for travel, you could wind up with negative miles or points in your account.

How to Cancel a Card Without Losing Your Points

If you want to close your credit card and have been making your payments on time, but don't want to lose your rewards or use them right away, you may have several options:

  • Downgrade to a different card. Some credit card issuers let you "product change," or switch between credit cards from the same issuer without closing your account. This can be a good option if you want to close a card because of an annual fee if there's another card that's part of the rewards program without an annual fee.
  • Transfer the points to another card. If you have multiple cards that are part of the same program, you can sometimes move rewards between accounts. Make sure you move the points from the card you plan on closing before closing it.
  • Transfer the points to travel programs. Similarly, some card issuer rewards programs let you transfer your points to partners' frequent travel programs. Transfer the points before closing the card, and you can redeem your points or miles later.

Also, you might not want to close a card if you've had it for less than a year. Opening a card, earning an intro bonus and then quickly closing your card could be interpreted as gaming the system and the issuer might clawback your rewards.

If you really want to close the card because of an annual fee, ask about downgrading and retention offers. Some card issuers may offer you additional rewards or a statement credit if you keep your card open. However, you may need to call (and sometimes say you're considering closing the card) to find out if you qualify for a retention offer.

How Does Canceling a Credit Card Affect Credit?

Closing a credit card can sometimes be the best option, particularly if you won't lose any rewards and can avoid paying fees for a card that's not helpful right now.

While closing a card can hurt your credit, the reasons are often misunderstood. For example, closing a card won't shorten your credit history or immediately impact the average age of your accounts. A closed card that's in good standing can stay on your credit reports for up to 10 years, and continue to count toward your age-related credit scoring factors during that time.

Closing a credit card will, however, decrease your available revolving credit, which directly impacts your credit utilization rate—an important scoring factor.

For example, if you have two credit cards with $5,000 credit limits, your total available credit is $10,000. Closing one credit card will lower your total available credit to $5,000. If you have a $2,500 balance on the card you keep open, your utilization rate jumps from 25% to 50%.

A lower utilization rate is better for your credit scores, which is why closing a card can hurt your credit. However, if you can maintain a low utilization rate (such as below 10%) after you close your card, you might not see a big score change.

Review the Program Terms and Monitor Your Credit

If you're considering closing a credit card and worried about losing rewards, review the program's terms carefully to see what will happen. Sometimes you'll have access to your rewards for a limited time. Or, you may be able to transfer and keep your rewards even if you close a card. You can also sign up for free credit monitoring to see how closing your card impacts your credit, and learn how to improve your credit in the future.