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. Customers have had to jump through the most hoops to access points from closed Citi accounts.
New York State Senator Shelley Mayer 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.
That bill has now passed the state Senate. (HT: Danny Deal Guru)
Doctor of Credit notes that “During the recent American Airlines saga, American Airlines claimed the cancelled account holders participated in fraud and American Express uses misuse language when clawing back points/cancelling accounts.” In fact state law can’t do much with airline programs because the Supreme Court has ruled that states can’t impose regulations on airline frequent flyer programs.
Most importantly 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.
Banks are heavily regulated already, and consumers have the CFPB for complaints. If this law is implemented banks can continue to shut down accounts unilaterally citing ‘rewards fraud’ as a reason.
And consumers should judge the value of a rewards program based on its behavior towards members. Ultimately it seems like a pretty low priority as far as regulations go, protecting the pretty well off credit card rewards members against a known risk (for those who’ve done their homework).