(Update 12/13/23: This law was passed and just went into effect for cards closed from December 10, 2023 and beyond. New York residents should have all redemption options available to them for 90 days after a card is closed.)
The New York senate has passed ‘Senate Bill S7104A‘ that states credit card customers must be given a 90 day grace period to use credit card rewards after a card is closed.
IF ANY CREDIT CARD ACCOUNT OR REWARDS PROGRAM IS MODIFIED, CANCELLED, CLOSED OR TERMINATED, THE HOLDER MUST RECEIVE NOTICE FROM THE ISSUER OF SUCH CANCELLATION, CLOSURE, TERMINATION OR MODIFICATION AS SOON AS POSSIBLE, AND IN ANY EVENT WITHIN FIFTEEN DAYS OF SUCH CANCELLATION, CLOSURE, TERMINATION OR MODIFICATION. BEGINNING WITH THE DATE ON WHICH NOTICE IS SENT, THE HOLDER SHALL HAVE NINETY DAYS TO REDEEM, EXCHANGE, OR OTHERWISE USE ANY CREDIT CARD POINTS
The terms of the bill also provide an exclusion for fraud and misuse.
THE PROVISIONS OF SUBDIVISION TWO OF THIS SECTION SHALL NOT APPLY IN THE CASE OF FRAUD BY THE HOLDER WITH RESPECT TO THE CREDIT CARD ACCOUNT OR ANY RELATED REWARDS PROGRAM, OR MISUSE BY THE HOLDER OF THE CREDIT CARD ACCOUNT OR ANY RELATED REWARDS PROGRAM.
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. That being said this new bill could be useful for cards with annual fees as you could cancel the card and still have 90 days to use the points, although presumably any multipliers or increased redemption rates you normally get for holding the card (e.g Chase Pay Yourself Back) wouldn’t apply. Many card issuers also already offer a grace period for annual fee refunds.
In the past some card issuers have prevented residents of specific states (notably Iowa) from applying for cards due to certain local legal requirements. It’s unlikely that this would be the case in New York due to the market size, but specific exclusions could be put in place.
Hat tip to imnion