How to Cancel a Credit Card
There are several reasons you may have considered canceling a credit card. You may want access to more premium perks than what’s offered from your starter-credit card. You may no longer need to earn airline miles from your travel rewards card. Or you may have recently paid off a high-interest credit card and don’t want to be tempted to rack up more debt.
But whatever your reason, know that closing a credit card can have a negative impact on your credit report. And it also isn’t as simple as just cutting up the card or placing it in a drawer and never using it again.
To cancel your credit card properly, follow these six steps:
How to cancel a credit card
1. Pay off your existing balance in full
Although some issuers allow you to close your account to new charges while paying off your existing balance, we recommend paying your balance in full before closing the account. This can help you avoid forgetting about the account and missing payments — which could result in a big hit to your credit score.
2. Redeem any remaining rewards
If you have credit card rewards, they’ll likely expire automatically when you close the account. To avoid losing these hard-earned rewards, it’s best to redeem them prior to canceling your credit card.
3. Call your credit card issuer
Once you’ve confirmed that you have a $0 balance and no rewards remaining in your account, you can start the actual cancelation process. To do this, call the number on the back of your credit card and speak with a representative.
The representative may try to retain you as a customer by offering incentives, such as waiving your annual fee for a year. But if you decide to proceed with the cancellation, note the date and time of your call, the name of the representative you’re speaking with and the mailing address you should use to follow up with a written letter.
4. Follow up with a letter to the issuer
While this step isn’t required, it’s a good idea to mail a certified letter to the card issuer to confirm your cancellation. This documentation can help provide an extra layer of protection if there was a mistake made during the cancellation process and your account remained open.
5. Check your credit reports
One to two months after canceling your credit card, check your credit report to verify that the account was closed and that you don’t have an existing balance on the card.
You can request a free annual credit report online at AnnualCreditReport.com. Note that you can request one free copy of your credit report per year from Equifax, Experian and TransUnion. You can also view a copy of your report from each of the three major credit bureaus online weekly.
6. Destroy your credit card
To prevent your credit card information from getting into the wrong hands, you should destroy the card before throwing it away. If your credit card is made of plastic, you can cut it up with scissors or run it through a shredder. But if your card is made of metal, you’ll have to mail it back to the issuer, take it to a bank branch or cut it up using tin snips.
Is it bad to cancel a credit card?
Closing a credit card can lower your credit score, since it affects the following factors:
- The length of your credit history. Lenders like to see that you have a long history of using credit responsibly. But each time you close a credit card account, it shortens your average length of credit history.
- Your credit utilization ratio. Your credit utilization ratio — the amount of debt you’re carrying compared to the amount you can borrow — increases each time you close a credit card. Experts recommend keeping this amount below 30%.
- Your credit mix. Lenders also like to see a diverse mix of revolving credit (like a credit card) and installment loans (like a car loan). So if you close a credit card without opening a new one, it’ll affect your mix.
Should you close a credit card?
If you have a major lifestyle change or a credit card no longer suits your financial needs, it could make sense to cancel it. For example, you may need to separate finances due to a divorce, or you may have too many cards to efficiently manage. Or, you may no longer need the premium perks that come with a card that charges a high annual fee.
Still, because closing an account can negatively impact your credit in the ways mentioned above, you may want to consider these alternatives:
Keep the card open and continue to make small, recurring charges.
If you stop using your card altogether, the credit card issuer will likely close your account due to inactivity. To keep the card open, make a small charge on it regularly (a recurring subscription or utility payment, for example) and set up autopay so you don’t miss the payment.
Note, this option is really only ideal if the card doesn’t charge an annual fee.
Request a product change.
Instead of canceling the card, you may be able to switch to a different card from the same issuer. For example, if your existing card has an annual fee, you may want to request a downgrade to a $0-annual-fee card.