Hi there, it's Ernest from Trip Astute. In
this video, we're discussing what you should do before canceling your travel
credit card. (Light chiming music) The end of the year is a good time to reflect on whether you're
getting the value you want from your credit cards. Sometimes our spending
habits or travel goals change with life events, so it's healthy to re-evaluate
whether you're getting the full value from your travel credit card.
previous video we explored why it's sometimes worth paying an annual fee on
a card. I won't get into all the details, but I
have some cards where it's worth paying the annual fee every year even if I
don't use the card, since the annual benefit is worth more than the fee. An
example would be the Chase Hyatt and IHG cards which give me a free night
stay every year as part of my annual fee. One thing I would caution against is
cancelling your card immediately after earning your opening bonus.
Doing so can
hurt your relationship with the issuer, and definitely jeopardize future
applications with them. Instead, I would give yourself at least 10 months to
evaluate whether the card is a good fit and whether you're getting value from
the card. So if you're considering cancelling your credit card, here are
some quick things to consider. Number 1: Transfer or spend any remaining points.
This is a common mistake made by a lot of folks.
If you cancel your card, you'll
often lose the points associated with those cards. This is generally the case
with cards associated with flexible point programs like Chase's Ultimate Rewards or
American Express' Membership Rewards. For these situations,
I suggest transferring your points to another card that earns the same type of
points, transferring to a travel partner, or transferring to a household member.
Transferring to another card that earns the same points is really easy. For
example, here's a list of cards from the three major flexible points programs
that can share points and will allow you to move their points within their
For co-branded cards, which are basically cards associated
with a brand other than the issuer, like the Chase Hyatt or United card, the
points are with the travel partner. In this case, you're usually safe to cancel
the card without losing your points. So even though you cancelled your card, the
points are with the travel company, like Marriott or Southwest, so they won't
be lost. However, any charges that haven't posted to a statement may not make
it to the travel partner once you cancel your card.
Number 2: Ask the issuer for
a retention offer. Sometimes it pays just to ask whether you can have the annual
fee waived or offered a retention bonus. This can be really hit or miss, and I
wouldn't do it unless you're seriously considering cancelling your card. Though
it's not uncommon for issuers to offer incentives to keep card members from
Number 3: Consider downgrading your
card instead of cancelling. Since your credit score can often take a hit if you
cancel a card, a better option is to downgrade your card to a free version.
This can often be done with cards that earn the same type of points. For example,
a Chase Sapphire Preferred or Reserve card can be converted to a Chase Freedom
or Freedom Unlimited with no annual fee. Here are some examples of popular
rewards cards and their no annual fee equivalents.
You'll often lose some
of the benefits and perks that come with a premium card, but this method will
usually allow you to keep your points. Also, this strategy is useful if you're
restricted by an issuer's rules, such as Chase's 5/24 rule, but want to get one of
their new cards. I actually did this when I got my Chase Sapphire Reserve. Since I
already had a Sapphire Preferred, I.
Downgraded it to the Freedom Unlimited
since I wanted the card anyway, and was willing to forfeit the new card opening
bonus because I plan to keep the card for the long term. Number 4: Dispose of
your old card. Most plastic cards can be destroyed in a shredder, but if your card
is metal, you definitely want to send it back to the bank. Do not run it through
the shredder since it will get stuck! Most issuers can provide a pre-paid
return envelope if you need to send one in.
You can also drop them off with your
issuer if they have a branch near you. I. Would just suggest marking the card with
"do not use" in the signature area. Do you have any tips for cancelling a credit
card? If so, let us know in the comment section below.
We've included referral
links to some of the popular Chase cards. Trip Astute does get a commission
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Until next time, travel safe and travel smart..