To cancel your credit card, call your credit card company and ask to close your account. You will also need to bring your balance to zero, but you may be able to close your credit card account first and then continue making the necessary payments.
Canceling a credit card without hurting your credit score is a bit harder. The key is to avoid closing your oldest and highest-limit accounts, especially if they don’t charge annual fees. And if you really need to close such an account, you can minimize the impact by doing it when you won’t need your credit score for anything important for at least a few months.
You can estimate exactly how much closing a credit card will hurt your credit score using WalletHub’s free credit score simulator tool.
How to Cancel a Credit Card
Flip the credit card over and call the customer service number listed on the back.
Credit card companies typically do not allow you to cancel an account online.
Enter your 16-digit card number to speak to a representative.
If you don’t have the physical card, you can easily find the number through your online account. And the issuer can always look up your account number using your SSN.
Tell the representative you want to close the account.
Before finalizing things, it’s a good idea to confirm that you don’t have any unredeemed rewards or an unpaid balance.Some people also recommend mailing the credit card company a cancellation letter to be sure the request is on record and does not fall through the cracks. But that’s probably overkill nowadays.
Redeem any unused rewards.
Credit card companies make it nearly impossible to redeem rewards once the cancellation process begins. You can’t count on a customer service representative warning you ahead of time, either. Leaving rewards on the table is one of the most common mistakes people make when closing unused credit cards. Be sure to spend them or transfer them elsewhere (e.g. another card from the same issuer or an eligible travel partner).
Make sure there is no unpaid balance.
You can’t completely close a credit card account with an unpaid balance. The terms of your agreement with the issuer won’t be satisfied until all amounts owed are repaid or you come to a settlement.This can be a stumbling block for many people given how confusing credit card billing is.
Even if you paid the full amount listed on your last statement, there still could be a small balance remaining if the issuer charged interest between your statement date and when you paid the bill. So it’s best to double-check your balance online and confirm with a customer service representative that it’s zero before finally requesting closure.
Verify the change is noted on your credit reports.
About two months after you close your account, check your free credit report to make sure the account in question is marked as “closed.” If it’s not, the cancellation might not have gone through due to some mistake by the credit card company. And you’ll need to notify them of the error.
Cut up your card before disposing of it, just to be safe.
“Investing in a shredder is one of the best $25 investments someone can make,” says Christopher Browning, an assistant professor in the Department of Personal Financial Planning at Texas Tech University. “Even if a credit card is expired and can’t be used to make purchases, simply throwing it away makes information that is potentially sensitive available for someone to use in a harmful way.”
Effect of Closing a Credit Card on Your Credit Score?
Closing a credit card account can hurt your credit score, and there are two major reasons for this. It can hurt your credit utilization ratio and it shortens the average age of your accounts, both of which are important credit score components.
You can estimate how much closing a credit card will hurt your credit with WalletHub’s free credit score simulator, and you can also read more about the different reasons your score may be affected.
When to Cancel a Credit Card
It’s unwise to cancel a credit card account without carefully considering the potential credit score damage. But even with your score’s fate factored in, there are some situations when you should put an old credit card to rest. We’ll lay out the most common ones below.
- When an unused card has an annual fee
- When you have too many cards
- When you’re not planning a big loan
- During divorce proceedings
- As part of a debt settlement/management agreement
- If you’re a victim of fraud
You can learn more about when to cancel a credit card on WalletHub. It’s also worth noting that if your desire to cancel your card stems from the belief that it will lead you to overspend, you can always just cut it up! That will remove the temptation without hurting your credit.