Image source: Getty Images.
While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See our full advertiser disclosure here.
One of the key tenets of maximizing credit card rewards is that every card in your collection needs to pay for itself. If you aren't getting enough value from your rewards and perks to balance out what you're paying to the credit card company, rethink your card choices.
These days, of course, travel rewards have become a lot less rewarding. While issuers have worked to keep their travel cards relevant (with, for example, the short-term addition of grocery rewards), a lot of us are looking to kick those $400+ annual fees to the curb.
Unfortunately, the very rewards that may have drawn you to your travel card could be lost if you're not careful. On the bright side, there are ways to get rid of your expensive travel card without losing out on your rewards.
A strategic product change can save money and rewards
In most cases, the best way to keep your points when ditching your card is to have another card from the same issuer with the same type of rewards. Most issuers pool rewards across accounts, or allow you to transfer your points from one card to another. American Express, for instance, automatically puts all of your Membership Rewards® points in one pot.
An easy way to keep your points safe is to downgrade (also known as a product change in industry speak) your pricey card to a more affordable one in the same card family. You may not make the most of your Chase Sapphire Reserve® credit card from Chase, for instance, but instead of canceling, you can downgrade. The Chase Sapphire Preferred® Card offers similar purchase rewards -- for less than a third of the annual fee.
Because you're changing your account rather than closing it, your account history and credit limit should remain the same. This can prevent any changes to your credit scores that closing a credit card account can cause.
A new card can be extra rewarding
While a product change is a simple way to keep your rewards and your credit intact, it does have a major downside: You won't earn a sign-up bonus. While upgrading a card often comes with a bonus, downgrading rarely qualifies.
If your credit can weather the potential impacts of a closed account without much damage, consider signing up for a new card rather than requesting a product change. This gives you a chance at a new sign-up bonus. Even no-annual-fee cards can offer bonuses of $150 or more that can be worth a small credit score dip.
Just make sure the new card earns the same type of rewards -- and has the same redemption options. For example, with card issuer Citi, the Citi Prestige® Card earns ThankYou® Rewards you can transfer to more than a dozen travel partners. The ThankYou® rewards earned with the Citi Rewards+℠ Card, on the other hand, can be transferred only to a smaller number of partners.
Be sure you open your new card before closing your existing account. Your rewards may disappear as soon as you close your account if you haven't opened a new card and pooled your points.
When all else fails, do the math
You may not always want -- or qualify for -- a new card, or even a downgrade. In that case, it's possible to put your rewards to use before you close your credit card account so they aren't lost in the ether.
The best per-point value you'll get out of your travel rewards is, appropriately enough, when you redeem them for travel. In most cases, this means transferring your points to your issuer's hotel and airline partners.
Just as not all redemption options offer the same value, not every transfer nets a high per-point return. Ideally, you can transfer your rewards where you'll get the most value out of your redemption, but keep in mind that value is relative. You may be able to redeem rewards with a particular hotel chain for a high per-point cash value -- but that only works if you stay with that chain before your rewards expire.
Whatever path you choose, make sure to do something. You earned your rewards fair and square, so why not hold on to them?
