Chase Sapphire Preferred

Don’t Cancel Your Card Too Soon (& Make Sure You’re Spending the Minimum Amount)

We may be compensated when you click on certain links from our advertising partners, such as American Express, Chase and Barclaycard. We are very grateful if you decide to do so! Opinions expressed on this site are ours alone and have not been reviewed or approved by the issuer. Pls see here for details.

Even though we covered this concept in a couple different places throughout this series, we wanted to be adamant on this point: don’t cancel your card too early, and make sure you’re meeting your minimum spend!

Problems With Cancelling Too Early

Canceling a credit card is a viable strategy after you’ve gotten the value you wanted out of the card and no longer wish to pay its annual fee.

However, canceling too early can affect your credit score in a bad way (refer to our credit score section).

Make sure to plan it out if you really want to cancel a card. Most cards don’t make you pay the annual fee the first year, so waiting 12 months is a good minimum timeframe.

If you don’t have extensive credit established, then you’ll need to be extra careful. Never cancel your oldest credit card, since average account age is a large portion of your score.

In fact, we highly recommend getting a non-annual fee card as your first/second card, simply so you can sit on it for years to build your credit.

That’s what many college students do; opening a card while young helps them build credit throughout their life.

Lastly, we’ll note that you’ll want to ensure that all the points you have earned on a card have been processed before cancelling. It would not be fun to realize that because you cancelled, the rest of your points didn’t go through!

Hot Tip: Instead of cancelling your card with an annual fee, why not try to downgrade it instead? Many cards offer a no-annual fee version, so call your customer service rep to see if this is an option for you!

Get Your Sign-Up Bonus Secured

Secondly, make sure to meet the minimum spends! If not, you are missing out on the biggest value of the card: the sign-up bonus.

These are often worth hundreds of dollars or more, and when you don’t meet the spend needed to attain them you are essentially throwing money away.

Again, by minimum spend we mean the amount the card agreement makes you spend in order to receive your sign-up bonus, often about $3,000 in the first 3 months.

This is why it’s important to know your spending beforehand. If you can’t actually support the required spending on the cards you’re looking at to earn a bonus, then choose different cards!

Otherwise, you may want to ask yourself if a points strategy is really appropriate for you. Recall that any fees incurred by not paying off the cards will greatly outweigh any benefits of the card.

Final Thoughts on Meeting Your Spends

As you continue with your points strategy, keep tracking all of your card information so you’re informed about the status of your credit, and are able to make the best decisions and keep getting the best deals.

Sometimes, credit card companies send targeted offers to your house, which can be even better than the deals we showcase here on the blog. If that is the case then, by all means, take advantage!

The Card Match Tool may also help you find other offers available to you that you weren’t aware of.

When you keep your credit at its best, you’re more likely to receive these offers, which helps you boost your travel more and more!

Part 11: Earning Miles >>

Photo Credits/Credit/Copyright Attribution:
Newbies Featured Image: g-stockstudio/Shutterstock

Chase Sapphire Preferred® Card

Chase Sapphire Preferred® Card
  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Apply Now Full review

FAQ

Why would I cancel my credit card?
Cancelling your card is mostly done to avoid an annual fee if you are not using the card. The annual fee is just money out of your pocket without any benefit.

If your card does NOT have an annual fee, we recommend keeping it open. There is no harm in having an open, unused line of credit, and in fact it only helps your credit score over time.

Not using your card that has an annual fee? The only other reason you would want to keep it is if its benefits are more valuable to you than the cost.

This could be status in some loyalty program, access to certain portals, and so on. Be sure to consider these before cancelling the card.

You could also just try to downgrade the card to a no annual fee version instead, which is likely your best choice!

When should I cancel my credit card to avoid the annual fee?
Look at the date you opened your credit card to find the anniversary date on which you will be charged your annual fee. This is the date you want to work around.

You could call the day or week before to avoid the fee; the longer the better because they may charge it slightly early.

Note that canceling the card if you have used it is not as easy as just calling in, because you want to make sure you don’t lose any points that you have collected.

Therefore, before canceling, you should make a plan to collect all points you have earned (some can take 4-8 weeks to hit your account!) and use or transfer them before canceling.

You may need to stop spending on the card a couple months before your anniversary, and then collect and transfer/use the points. This way, when your anniversary day approaches, you can cancel the week before without taking a points hit.

Always plan these things out ahead of time and consider the opportunity cost of canceling too soon!

How do I cancel my credit card?
You simply need to call the number on the back of the card and ask a customer service agent to cancel your account. If you don’t have the right number, they will either give it to you or transfer you to someone who can help.

Will canceling my credit card affect my credit score?
It can. This is why it is so important to review our credit score guide. Every card will affect your total credit pool available, your credit utilization rate, and your average age of credit.

If you don’t have a lot of credit, canceling a card can be a huge hit to your credit score. This is why we recommend getting a no annual fee card for your first or second card, and then never closing it (even if you don’t use it!).

With a generous pool of credit and good credit age, if the card you are canceling is not your oldest card, then you likely won’t take too large of a hit.

The best way to tell is to gather all your data from all your cards and gauge how much of a hit your metrics will take when canceling.

Try downgrading your card instead of closing it to save yourself the potential credit hit.

What is the best way to build credit age?
Credit age is merely the average age of all your accounts. Therefore, in order to build it, you need to have lots of old accounts, and very few new accounts.

If you don’t have any credit, you MUST start as soon as possible to begin building this metric. We recommend getting 2-5 cards in your first year so you have a large pool of age.

Then, you can open 1-2 cards per year after that without affecting the age too much.

Where can I find my minimum spend requirement?
Your credit card sign-up bonus can be most easily found when you open up the card. That’s why we recommend keeping track of everything in a spreadsheet.

If you don’t remember and didn’t write it down, there are 2 ways you can check it. One would be to find the documents your bank sent you when you opened the card and skim through the fine print until you find a part about the sign-up bonus.

You can also just call customer service and they can find out for you.

Can I get my sign-up bonus if I don’t meet the minimum spend requirement?
Unfortunately not. This is an all or nothing requirement, so if you are short by even a few dollars you will get 0% of the sign-up bonus. This is why we are very adamant on tracking your credit cards!

I met my minimum spend requirement but I don’t see my points. Where are they?
If you don’t see your points, they may not have hit your account just yet. Most bonuses can take 6-8 weeks to hit your account. Track when you hit your spend, and then mark your calendar for 6-8 weeks from then to check it.

Still don’t see the bonus in your account? You may need to call customer service to ensure they got your account information right and there were no glitches in getting you your points.