Should I Cancel My Credit Card or Will I lose All My Points?

Should I Cancel My Credit Card or Will I lose All My Points?


The first year of racking up credit card points is an exciting time in a young boy’s life. It stays exciting for long after that; however, once you hit that first year mark those annual fees will start to rear their ugly heads. At this point several questions will go through your head… Should I cancel my credit card? Will I lose all my point? etc. If you’re like me, signing up for new cards every three months, then you’ve got some decisions to make: either pay annual fees every three months, or start cancelling cards.

Since most cards waive their annual fee for the first year, or at least have a hefty bonus to make it worth it, it’s a pretty easy decision to sign up and keep the card for a year. Deciding to pay the annual fee and keep the card another year is where it gets a bit hairier. Let me make it clear that I would never cancel the card before it comes up on a year; it just makes no sense. There is no downside to holding the card the entire year as the annual fee won’t be assessed until that point. As your average account age is one of the factors of your credit score (more about that here), you want to keep each account open as long as it continues to make sense. Often times it stops making sense as soon as the annual fee comes up, other times it makes sense to pay the annual fee and keep the card. As I’ve gone through this journey there are two things that I have considered in this decision: the type of points you get from the card, and any anniversary bonuses for keeping the card.

Type of Points – Co-Branded vs Bank Points

If you have used all your points, this won’t be a factor. If you have a point balance, this is a big deal. I’ll tell you why, but first we’ll need to review the difference between co-branded points, and bank points.

Co-branded points are awarded by a bank when signing up for a co-branded credit card. The points however are not housed in the bank’s rewards program. They are housed in the rewards program with which the bank has co-branded. Some examples of this are the Chase Explorer Card, the Citi Platinum AAdvantage Card, and the American Express Hilton Surpass Card. Chase, Citi, and American Express are the banks that issue the cards and award the points. However, to access these points, you will need to login to the United Explorer, American Airlines AAdvantage, and Hilton HHonors rewards programs respectively. Though you get bonus points by spending a certain amount on the card in a certain time frame, and continue to earn points through making purchases on the card, the reward points and the credit card are completely separate from each other. This means that you can cancel the credit card with Chase, Citi, and American Express, but your points will still be in the United, American, and Hilton rewards programs.

That being said, a lot of points expire at some point. And one way to keep your points active in many of the programs is to continually add to your point balance. This is done with every dollar you spend on your credit card. So every month your expiration date keeps getting pushed back. Once you cancel your card, you’ve lost one of the ways to keep your points active. This can be overcome if you frequently use the brand of the card. For example, if you stay at Hilton’s often, that will add points to your balance and keep your Hilton points active. So if you’re going to cancel your card, either plan to use your points within the year, or have a backup plan to keep them active.

Bank points are the other side of the coin. These points are part of the bank’s very own rewards program. Chase has Ultimate Rewards Points, Citi has Thank You Points, and American Express has Membership Reward points. Flexibility is a huge benefit of bank points, but the downside is that any balance you have will be erased if you cancel the credit card. However, there are still ways around this. For example, if you have 50,000 Ultimate Reward Points, you could transfer all of them to a travel partner at a 1:1 ratio before you cancel the card. However, you need to be careful here as well. Once you transfer the points to a travel partner, those points become subject to all the same cancellation rules discussed above. So be sure you have a plan in place to use your points soon, or keep them from expiring until you do.

So the bottom line with this factor is that it’s a lot easier to cancel a co-branded card and keep your points. With bank points, you’ll need to transfer to a travel partner first. In either case, you’ll need to have a plan to make sure your points don’t expire.

Annual Fee vs. Annual Awards

Though not nearly as amazing as the sign-up bonus, many cards have an anniversary bonus. There are three cards that I continually keep and pay an annual fee because of this:

  1. Chase Hyatt Card
  2. Chase IHG Card
  3. Club Carlson Card

Chase Hyatt

The Chase Hyatt Card has a $75 annual fee. The anniversary bonus is a free night at a category 1-4 hotel. I’ve looked up five category 4 hotels and found a nightly rate for each. As you can see, there’s quite a range from $232 at the low end to $540 at the high end.

  • Grand Hyatt Washington DC – $359
  • Hyatt Centric South Beach Miami – $540
  • Grand Hyatt Rio De Janeiro – $232
  • Hyatt Regency Paris Etoile – $330
  • Hyatt Andaz Peninsula Papagayo Resort – Costa Rica – $275

Rio de JaneiroBoth my wife and I have the Chase Hyatt Card, so we pay $150 a year in annual fees. However, you can see that we could book a two-night stay in Washington DC at a value of $718. That means that we’re ahead by $568. We’ve found this to be a pretty good deal. Not only were we able to get a four-night stay in Maui for our sign-up bonus, but we have used our two free anniversary nights to stay in San Francisco for our anniversary, and to fund two nights of our vacation in Paris…. worth the annual fee.

Chase IHG

The IHG Card has $49 annual fee and an anniversary award night in any IHG hotel, regardless of category. This can be pretty substantial. Let’s do the same exercise with this card.

  • InterContinental Bora Bora Resort Thalasso Spa – $786.42
  • Crown Plaza Times Square Manhattan – $317.52
  • Holiday Inn London Express – Southwark – $304.57
  • Crown Plaza Los Angeles – Commerce Casino – $198.94
  • Intercontinental Bangkok – $163.99

Again, Kendra and I both have this card and pay $98 per year. We could book a two-night stay in the Holiday Inn London Express – Southwark, a value of $609.14, putting us $513.14 ahead.

Bora Bora

Club Carlson

We have really enjoyed the Club Carlson Card. It’s a bit different from the Chase cards. Rather than annual free nights, the anniversary bonus is 40,000 points with an annual fee of $75. This makes our value comparison different than the previous two, as we’ll need to assign a dollar value to the 40,000 points to see if it’s worth $75. Below are some Club Carlson properties as well as their per night dollar and point value, and a calculated 40,000-point value for each.

  • Radisson Blu Resort, Split Croatia – 50,000 points or $169/night – 40,000 point value = $135.20
  • Radisson Martinique on Broadway – 70,000 points or $276/night – 40,000 point value = $157.71
  • Park Inn & Suites by Radisson Vancouver – 38,000 points or $95/night – 40,000 point value = $100.00
  • Radisson Hotel and Suites Sydney – 50,000 points or $305/night – 40,000 point value = $244.00
  • Park Inn by Radisson Resort & Conference Center Orlando – 15,000 points or $67/night – 40,000 point value = $178.67

As you can see, the value isn’t as high on this card. Based on these properties, the value of the 40,000-point anniversary bonus averages to around $160. Where both Kendra and I have one, the total value is around $320, while both our fees come to $150, putting us $170 ahead. While the payoff isn’t as high with this card, it still makes sense for me to keep it. Why close cards and ding our credit reports for cards that put us ahead $170?


Let’s face it, the anniversary benefits are nickels and dimes compared to the sign-up bonuses. That being said, you may want to take advantage of them. After having cycled through multiple credit cards, they may be the only bonuses available until some time passes and you can apply for the sign-up offers again. Obviously you don’t want to an annual fee for every credit card you’ve got in your wallet. But before you decide to cancel, make sure you know what’s going to happen to your point balance, and make sure you’re not giving up something of greater value by canceling. As I said above, these are the things I consider before canceling a card. If I’ve missed anything that you find important, please let me know in the comments.

12 Replies to “Should I Cancel My Credit Card or Will I lose All My Points?”

  1. Hmm…first of all, credit cards and I do NOT get along. I much prefer to pay cash or use my debit card. But after having read your article on the pros and cons of canceling your card, and the timing involved, I can definitely see why there might be mixed opinions. It is difficult to know at what point you would be hurting your credit score and at which point you should just take your losses and not pay that annual fee again. What a great use of your points, though–to save money traveling. Love it!

    1. I only recommend these methods to those that can use restraint and treat a credit card as if it were a debit card. That being said, anyone can get to that point. Once they do, a whole new world of possibilities are opened up to take the kind of vacations most people spend decades saving for. 

      Thanks for the comment JuDy. 

  2. I use to use a credit card years ago but found that it was too easily available for credit lending and if you are not careful you can owe a lot of money. it is up to the individual if they feel they can control their use . i ended up cutting mine up and have never used them since, now i only use a debit card.

    1. Good for you Andrew. I’m glad you were able to get your spending under control. I would only recommend using travel credit cards if you can resist the urge to go into credit card debt. If you can manage treating it the same as a debit card, then you can get a lot of value out of their sign up bonuses. 

  3. Man my friend get many credit cards just a few months ago and he said that he will use them for his advantage. But as I understand fro your writing he can have risk about this point thing. I am sure that he does not know a lot. I will definitely pass this writing to him. I am sure he will have many questions for you.

  4. Hey there, I have been a credit card holder since I have a stable income and credit card can really help you or kill you. For me, financial discipline is absolutely critical if you want to hold on to a credit card to maximize the bonus, cash back, rebates and more! However, if you are one who tend to spend without much thought, you can be sure that credit card bills will be back haunting you for the longest time. As for the annual fee charges, I usually just give the customer hotline a call and tell them I want it waived or I’ll cancel the card. I have never received a rejection before, not even once! The banks and financial institutions are all competing to have their credit cards being used and utilize and they are more than willing to waive the charges to keep you as an active customer!

    1. I’m glad you’ve been able to take advantage of all the great credit card benefits. I haven’t had much luck getting my annual fees waived. I’ll have to start giving it a try again. Thanks for your helpful comment. 

  5. Hey there
    Interesting read!
    I’ve only had 1 credit card my entire life and I used it to buy a dishwasher on interest free terms. Worst mistake ever. I ended up getting rid of my card.
    I understand how people can get sucked in to sign up for these and all the bonuses but you really need to stop and think is it all worth it. I mean if I bought something for $500 and that earned me 50 points, then you look at what 50 points entitles you to it’s really not much.
    Thanks so much for the information

    1. Hi Hailey,

      Thanks for the comment. The sign up bonuses can actually be quite significant. I have literally taken three vacations that each would have easily cost between 8 and 10 thousand dollars. So all together the bonus points I’ve earned durning my tenure in this hobby are probably worth 30 grand. That’s worth it to me. 

      That being said, you should only do this if you can keep the same spending habits as if you were using cash. It wouldn’t be worth it if you buried yourself in credit card debt. As long as you pay off your credit card every month, you pay zero interest AND get to go on dream vacations for free. 

  6. I don’t even own a credit card believe it or not. Well I do own the one that is also my bank’s debit card. I didn’t have any interest in using one until I read your article. The fact that I can a night in a good hotel would more than pay the cost of an annual fee is enticing. How would I start in applying for one of these credit cards? Thanks for the information.

    1. Hi Sbirkett, I remember when I first saw the value of credit card points. It was like Christmas morning when I was a kid. I’ve got a hunch you’ve got that feeling too, mixed with a bit of nervousness for where to start. I was a little nervous when I started it too. Just take one credit card at a time and it will become more comfortable as you learn more about it.

      As far as where to start, make sure you read my How to Travel for Less page. It’s a really good place to start. Then when you’re ready to get your first card, head over to my Top Travel Credit Cards page. I have all the best cards listed with their associated bonuses and links to apply.

      As you go forward, please send me a message or leave a comment with any questions you have.

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