What Happens to Your Points When You Cancel a Card?

A core strategy when it comes to earning enough points to fund continuous adventures around the globe is repeatedly signing up for the same credit card and obtaining the signup bonus each time. By raking in mammoth signup bonuses over and over again, one can easily achieve a lifestyle in which travelling on points, perhaps even in business class or First Class, is a regular pastime.

In last week’s article on how families can leverage this to travel extensively with their children, reader Yin posed the following question:

When you suggest closing the account after getting the sign up bonus, where does the sign up bonus go to?

I always thought I would lose the points accumulated by closing the account associated with it. So I always use the points before cancelling the card.

Is there any way I can close the account and keep the points earned?
— Yin

Indeed, this is one of the most frequent questions that comes up among beginner “churners”. In this post, we’ll have a look at what happens to you points when it comes time to cancel the card, and what strategies you can employ for each of the card issuers out there in order to preserve your hard-earned points as you progress towards those big redemptions.

 A recent cancellation spree...

A recent cancellation spree...


The Rule of Thumb

The general rule governing these situations is actually very simple: it all depends on whether the points in question are part of an in-house points program operated by the credit card’s issuing institution, or a third-party loyalty program associated with a co-branded credit card.

Examples in the former category include:

As you can see, each program is owned and operated by the same institution that issues the credit cards through which you earn points. In these cases, your points account is typically associated with one particular credit card, and if you were to cancel that card, your points will typically be nullified as well unless you were to transfer them out or use them up beforehand.

On the other hand, you have third-party programs that partner up with a financial institution in order to issue points-earning credit cards. Examples of this include:

For these loyalty programs and their co-branded credit cards, any bonus points, as well as the points you earn from everyday spending, are typically transferred to the third-party account with every monthly statement. If you were to cancel the credit card, nothing would happen to the points you’ve already earned, since they’re now sitting pretty within your loyalty program’s points balance and not associated with your credit card or financial institution in any way.

That’s really all there is to it on a basic level. Things can get a little confusing, though, when you’re looking to earn miles through both co-branded credit cards and by transferring points from proprietary programs. For example, a common way to rack up Aeroplan miles is to take advantage of both co-branded card offers, like the CIBC Aerogold Visa Card for Business, as well as the ability to transfer Amex MR points at a 1:1 ratio.

Therefore, if you needed to cancel both your CIBC card and, say, your Amex Platinum as well, you needn’t worry about losing your Aeroplan miles when cancelling the former, but in the latter case, you’d have to transfer out your points beforehand.

Often times, though, you might not be ready to transfer out the points to a certain program yet, or you’d like to maintain the versatility of keeping your points within Membership Rewards and make a decision on what to do with them later. In these situations, you’ll have to “rescue” your points out of the account prior to cancellation...


Keeping Your Points Alive

Of the proprietary programs operated by Canadian financial institutions, American Express Membership Rewards is no doubt the most powerful, in large part due to its ability to transfer points to Aeroplan at a 1:1 ratio and to SPG at a 2:1 ratio.

Many people cycle through several cards within the Amex MR family before accumulating enough points for a redemption, and therefore require a way to keep their points alive when it’s time to cancel a card and reapply in a few months. With Amex, this step is exceedingly simple: as long as you currently hold another MR-earning card, you can ask for the points balances to be consolidated to that other account before you cancel your existing card.

This can be done either via the Secure Message feature on the Amex website, or over the phone. Secure Messages are convenient, but calling tends to get the job done quicker, and you can typically get your points consolidated and your card cancelled in the same call.

 
 

If you hold the American Express Cobalt Card, which earns MR Select points rather than regular MR points, anecdotal evidence indicates that consolidating regular MR points into an MR Select account is permitted, while the reverse is not. This makes sense, since MR Select points are more restrictive in their utility – unlike regular MR points, you are only able to transfer them to hotel partners like SPG, and not airline partners like Aeroplan.

And if you don’t have another MR-earning card on hand, your only remaining options are to use up the points – ideally by transferring them out – or by signing up for a new card and consolidating your points over to that card before you cancel your old one.

The other banks’ points programs operate in a similar fashion. Points can typically be combined across credit cards – for example, I’ve had no trouble combining CIBC Aventura points that were sitting among a personal Aventura Visa Infinite and an Aventura Visa for Business.

If you do go ahead and cancel your card without moving the points out, one thing to note is that these programs typically give you a grace period after cancelling your credit card to use up your points, before you lose them for good. RBC Rewards and TD Rewards provide you with a 90-day window to use up your points, while CIBC Rewards and Scotia Rewards give you a 60-day window. 


Conclusion

Miles & Points beginners often wonder about the logistics of running a massive points-earning operation, and knowing which cards are safe to cancel without fear of losing your hard-earned points is a key part of ensuring that you rack up the points successfully. You have nothing to worry about when cancelling co-branded credit cards, whereas for in-house points programs, you'll want to make sure you've either used up the points or moved them somewhere else prior to closing your account.