Southwest Rapid Rewards points don't expire; however, if you close your account, you'll also lose the points tied to that account.
Key Takeaways
A credit card can be canceled without harming your credit score. To avoid damage to your credit score, paying down credit card balances first (not just the one you're canceling) is key. Closing a charge card won't affect your credit history (history is a factor in your overall credit score).
Keeping the card open can help maintain a healthy credit score by contributing to your credit history and utilization ratio. However, there are valid reasons to consider canceling, such as high annual fees or difficulties managing multiple accounts.
You will not lose your rapid rewards points if you close your credit card with Chase, as long as the points have moved over to your rapid rewards account balance.
With all of the major card issuers, if you cancel a credit card that earns flexible rewards, you lose any unredeemed points or miles.
Closing a credit card account may negatively impact your credit score, so it's important to carefully consider your options. There are alternatives to closing your Chase credit card, such as requesting a product switch, keeping your card but not using it or asking Chase to waive an annual fee you don't want to pay.
A crowded wallet and the temptation to spend might have you thinking about canceling unused credit card accounts. In most cases, however, it's best to keep unused credit cards open so you benefit from longer credit history and lower credit utilization (as a result of more available credit).
Your credit utilization ratio goes up
By closing a credit card account with zero balance, you're removing all of that card's available balance from the ratio, in turn, increasing your utilization percentage. The higher your balance-to-limit ratio, the more it can hurt your credit.
Key takeaways
If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.
It's important to pay off all your credit card balances before closing a credit card — not just the one you're closing. This will ensure that your credit utilization (which makes up 30% of your FICO Score) isn't impacted.
Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.
While closing a credit card can affect your credit scores, it's hard to say by how much. That's because there are other factors—such as the length of your credit history and whether you have a record of making payments on time—that also play a role in your scores.
Typically, credit card rewards programs – like the American Express Membership program – don't let you keep your points if you cancel the associated credit card. Third-party rewards programs – like Air Miles, McDonald's, and Scene+ – generally do.
If your credit card issuer cancels your account for inactivity, your points disappear. Some issuers might take away your rewards immediately. For example, the Bank of America® Travel Rewards credit card terms and conditions state that your points will be forfeited if your account is closed for any reason.
If you cancel an Amex consumer card or checking account and you do not have at least one other eligible, linked Amex card, you will lose all of the points you've earned.
Closing one credit card account likely won't make a big enough dent to hurt your chances of approval with future lenders, especially if you'll still have another form of revolving credit open, but it's worth being mindful of this if you want the highest credit score possible.
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
In the long run, maintaining financial health could be much better for your credit score than the benefits of keeping the card account open. If you feel that keeping the account open could send you back into a stressful debt situation, then chop it up and close it down.
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
In general, you should use your credit card at least once a quarter (every three months) to keep the card open and active.
You could ask to speak to your credit card issuer's retention department and tell them that you want to cancel your card to avoid being charged the annual fee. If they're worried about losing your business, they may offer to waive the fee.
No, your Chase Ultimate Rewards® points do not expire — as long as you keep your credit card account open. However, if you close your card account before redeeming or transferring your rewards, you'll no longer have those points.
The 5/24 rule, often referred to as the Chase 5/24 rule, is an unofficial Chase guideline that states you will not be approved for a new Chase card if you have opened five or more credit card accounts from any bank within the past 24 months.
Yes, closing credit cards, including a store credit card, can hurt your credit score. This is due to the fact that your score considers a few key factors, including your credit mix, credit utilization ratio and credit age. See below for the percentage breakdown of your VantageScore3.