If I cancel a travel rewards card, do I lose my miles or points? I want one I can cancel without losing anything. –Victor
That's a great question, because yes, if you're not careful, you could lose rewards earnings when closing a travel rewards card. But with a little advance planning, you can avoid this.
First, the type of card makes a difference. There are two types of travel rewards cards: airline or hotel rewards cards affiliated with a specific frequent flier program or hotel chain; and generic travel rewards cards. The former, for the most part, tie you to rewards with that specific airline and hotel; the latter award you in points that can be redeemed for any travel reward.
While you might prefer the flexibility of a generic travel rewards card, cards linked to a specific frequent flier program offer some additional benefits. First, if you fly frequently with the airline affiliated with the card, you will earn miles toward free trips faster, since you benefit both from the flown miles and the rewards earnings from your credit card.
Airline cards also come with multiple perks, such as priority boarding, in some cases, priority check-in and free checked bags. The savings of the free checked luggage quickly adds up if you travel a lot.
More pertinent to your question, you won't forfeit your miles earnings just because you cancel your credit card. Those points stay in your airline's frequent flier program. One caveat: With many frequent flier programs, miles expire if you don't show any activity within a given period. For example, American Airlines, United and US Airways miles expire after 18 months if miles are not earned or spent.
Fortunately, resetting the expiration clock won't require using the airline-affiliated credit card or even flying. It can be as simple as redeeming some of your miles earnings or making a purchase that earns you miles via the airline's frequent flier program online shopping portal (these are accessed via the frequent flier section of the airline's website).
However, airline rewards cards typically come with a higher annual fee, and if you don't fly frequently with a specific airline, the benefits are less valuable. If that's the case, a generic travel rewards card is likely a better option. But you won't get the free perks when you travel, and with a generic travel rewards card, you could lose rewards earnings if you cancel the card without first redeeming rewards.
However, there's a simple workaround to avoid losing your rewards points. Many generic rewards cards allow you to transfer rewards points to a frequent flier or hotel rewards card of your choice, where they will remain even after you close the rewards card.
For example, with the Chase Sapphire Preferred Card, you can transfer rewards points to many frequent flier and hotel rewards programs at a 1:1 ratio. Best of all, you get 40,000 bonus miles if you spend $3,000 within the first three months of opening the card. If you prefer to avoid the $95 annual fee (waived the first year), the Chase Sapphire Card offers similar benefits without an annual fee. The sign-up bonus is 10,000 points if you spend $500 the first three months, but in all other ways the card offers similar benefits.
In short, knowing and working within the terms of the card is the best insurance against unpleasant surprises.
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