To Increase Your Credit Card Reward, Transfer Your Limit Before Closing the Card
Closing a credit card does not always improve your credit score. For example, closing your oldest credit card can reduce the overall life of the loan – and credit bureaus often give out a few extra credit score points to people who have held the same credit accounts for, say, decades.
You may also see a drop in your credit score if closing your credit card negatively affects your credit balance (since credit bureaus want to know that you can manage several types of loans, such as credit cards and car loans).
But it is more likely that one simple factor will affect your credit rating: when your total available credit rating drops, your credit rating will decrease as well.
Unless, of course, you can increase or redistribute your credit before the card is closed.
It is relatively easy to increase your credit. Most credit card accounts on the Internet give you the option to request an increase in your credit limit (this may be hidden in the Settings or Manage menu, but it is). If you were a responsible user of credit, you could get a quick credit increase, and the increased credit limit could offset the credit you lose when you close your old card.
But you can also try to reallocate your loan. As The Points Guy explains, it is possible to move some of the available credit from one card to another if both cards are owned by the same issuer (Discover, Chase, Amex, etc.).
Card issuers are often willing to transfer at least a portion of your credit from one account to another. In most cases, this requires a phone call, but American Express makes the process easier by allowing you to transfer credit between accounts online .
I confess I have written about credit cards for over half a century and have never heard of it. However, this is definitely a thing – and aside from using it to keep credit available when closing a credit card, you can also use it to maximize your credit card reward (by transferring your credit limit to a card that offers higher rewards and then increase your spending on a card with a higher reward).
However, credit card issuers don’t always make it easy to reallocate credit. American Express seems to still allow users to transfer credit from one account to another online, although I couldn’t verify this myself since I don’t have an Amex card. Capital One has recently canceled such a feature, according to the FICO forums . When I checked my own credit card accounts online, I could not find any menu items for credit transfer / reallocation, although it was easy to locate the menu items that allowed me to request a credit limit increase.
So it might be better to ask for a higher line of credit than trying to transfer credit from one card to another (unless you really like calling support).
But if you are going to close your old credit card, try to take care of at least one of these options before using the available credit.