If you have an American AAdvantage account or a United MileagePlus account and cancel your co-brand credit card, you still miles in your American or United account. However if you cancel a bank rewards card, that’s akin to cancelling the account that holds the points. You’re going to lose your points.
- Generally if you have more than one card with a bank, you can pool all of your points into a single account (American Express does this automatically). So losing your points is only an issue when your last account with the bank is closed.
- Depending on the issuer you may be given a grace period in which to use your points.
If the bank closes your account you may initially not be able to do anything with your points. In most cases, as long as there’s no allegation of fraud, you’ll be able to either access the account briefly for redemption or receive some compensation for your accumulated balance. The bank is in the drivers seat here, though. And you have to push for anything you get.
American Express says if they close your account, points are forfeit, but if you close your account but have at least one non-Membership Rewards account still open you’ll have a 30 day grace period in which to use your points.
New York State Senator Shelley Mayer has introduced a bill that would require banks to give consumers 90 days to use their credit card rewards points if their account is closed either by the consumer or the bank.
Here’s the relevant text of the proposed law.
IF ANY CREDIT CARD ACCOUNT OR REWARDS PROGRAM IS MODIFIED, CANCELLED, CLOSED OR TERMINATED, THE HOLDER MUST RECEIVE NOTICE FROM THE ISSUER OF SUCH CANCELLATION, CLOSURE, TERMINATION OR MODIFICATION AS SOON AS POSSIBLE, AND IN ANY EVENT WITHIN FIFTEEN DAYS OF SUCH CANCELLATION, CLOSURE, TERMINATION OR MODIFICATION. BEGINNING WITH THE DATE ON WHICH NOTICE IS SENT, THE HOLDER SHALL HAVE NINETY DAYS TO REDEEM, EXCHANGE, OR OTHERWISE USE ANY CREDIT CARD POINTS THAT THE HOLDER ACCUMULATED AT THE TIME OF SUCH MODIFICATION, CANCELLATION, CLOSURE, OR
TERMINATION AS PERMITTED UNDER THE TERMS OF THE AGREEMENT OR AGREEMENTS BETWEEN THE HOLDER AND THE ISSUER, AND THE HOLDER AND ANY THIRD-PARTY WHICH IS SERVICING THE APPLICABLE CREDIT CARD ACCOUNT OR RELATED REWARDS PROGRAM, SUBJECT TO THE AVAILABILITY OF REWARDS.
This legislation, which would only apply to consumers in New York, wouldn’t force the banks to allow redemption of points in the event of fraud by the cardholder – whether credit fraud or rewards fraud. The law would also ban the expiration of credit card rewards points, though of course bank points generally don’t expire as long as an account remains open.
I’m not sure I see a groundswell for this, and it wouldn’t surprise me to see plenty of pushback from the banks. I’m not predicting this becomes New York law at this point but an interesting development.
I’m also not sure I see the consumer harm that’s being addressed here. I certainly would understand in the case of an airline shutting down accounts – there’s little redress other than filing a DOT complaint and DOT has been found to improperly ignore complaints about frequent flyer progams. But banks are heavily regulated, and consumers can generally manage their own points effectively – and would be able to continue to shut down accounts unilaterally under this law citing ‘rewards fraud’ as a reason.