Credit score

How to Cancel a Credit Card Without Destroying Your Credit Score

Sarah Tew/CNET

If you find yourself with too many credit cards or have been accumulate too much balance on them, you might consider closing a credit card. While this can make your life easier, there are some complications that need to be considered.

Contrary to what TV sitcoms might have taught you, canceling a credit card involves more than just cutting the physical card in half and throwing it in the trash. And it could harm your credit score by affecting the length of your credit history and your rate of credit utilization. We’ll tell you how to cancel a credit card without destroying your credit and how to know if canceling your credit card is the best option.

Here’s why canceling a credit card usually hurts your credit score

Closing your credit card accounts generally affects your credit in two ways – by changing the length of your credit history and by affecting your rate of credit utilization – two factors that help determine your credit score.

It changes the length of your credit history

Your credit history represents 15% of your credit score and includes the age of your oldest card, your newest card, and the average age of all your cards. A longer credit history can increase your score.

Closing your oldest card could shorten your average and lower your score. But the impact will not be felt right away. Typically, a closed credit card in good standing will stay on your credit report for 10 years, so it may take some time before closing an older card account affects your score.

It can increase your credit utilization rate

Your credit usage can be found by dividing your card balance by the total credit limit of all your cards. For example, suppose you have a balance of $500 on all cards and the total limit on all your cards is $5,000. Your credit utilization rate would be 10% ($500 divided by $5,000 equals 0.1 or 10%). If you close a card with a credit limit of $1,500 and a balance of $0, your credit utilization rate will increase to 14% ($500 divided by $3,500).

The higher your credit usage, the riskier you appear to creditors and lenders. This is because it could be a warning signal that you are in financial hot water or having trouble keeping up with your bills, so you resort to plastic. So where should your credit usage be? The rule of thumb is to aim to keep it below 30%. Credit usage makes up 30% of your credit score, so it’s important to keep your usage low if you want to maintain a strong score.

When closing a credit card makes sense

So is it bad to close a credit card? Not necessarily. While this may hurt your score, there are a few instances where it might be a good idea to do so:

  • High APR. If you have a high balance and are only making minimum payments on your card, and the amount of interest you are paying on a card is getting large, it may be a good idea to close that card.
  • High fees. It might be a good idea to cancel a credit card if there are high fees, such as late payment fees, annual fees, cash advance fees, or fees when you go over your credit limit .
  • Frequent expenses. If your balance keeps growing and earning interest, canceling your card might be the smartest move to avoid getting into debt.
  • Divorce or separation. If you had a joint credit card with a spouse or significant other and you’re going through a breakup, closing your credit card could help you keep your finances in order and prevent your future ex from making unwanted purchases. desired on a joint card.
  • Outstanding debt. If you have outstanding debts that you are struggling to repay or have a debt management plan that requires you to cancel your credit card accounts, this may be unavoidable. Although your credit will likely suffer, closing these accounts so you can focus on other debt payments could set you up for long-term success.

If you can resist the temptation and avoid touching your credit card entirely, you can keep your card open while you focus on other debts or slowly paying off outstanding balances.

How to close a credit card the right way

If you need to cancel a credit card, you must follow a procedure.

1. Pay off your balance

To cancel your card, your balance must be paid in full. Otherwise, you will have to keep it open until the balance is zero.

2. Redeem all existing rewards

Any reward points you’ve earned using your card often disappear once you close a card. Depending on the card, you may be able to transfer your points to another card or cash back program. So take advantage of those reward points before you cancel.

3. Call the credit card company

To officially cancel, call the number on your card bank and speak to someone at the credit card company or bank that issued that card. The customer service representative will most likely try to entice you with attractive offers to keep your card open. Stay strong and remember the reasons why you are closing your account.

4. For extra protection, send a cancellation letter

Although not required, send a certified letter to the credit card issuer stating that you have canceled your card. When you’re on the phone with the customer service representative, ask them for the best address to send such a letter. And ask the issuer to confirm that your account has been paid in full.

5. Check your credit report

Before closing your card, check your credit file and check for any errors. You can order a free report every 12 months from each of the three credit bureaus – Equifax, Experian and TransUnion – at

If you see any errors in your account history, such as payments mistakenly flagged as late or missed or payments flagged to the wrong account, you can file a dispute. The credit bureau has 30 days to review and respond to your dispute.

Once you have closed your account, it is advisable to review your credit and watch for errors. Common errors that can occur after a card is canceled include an account showing as open and active even after you close it, or your credit report missing the “Closed by Grantor” note. It must be clear that the account has been closed by the creditor.

6. Dispose of your card safely

Once you have successfully closed your account, you can safely dispose of the card. Shred your card and make sure the number sequence is unrecognizable.

Alternatives to consider

If you don’t want to cancel your credit card and hurt your credit score, here are some other options to consider:

  • Negotiate for a lower rate. If a high APR is the impetus for closing your account, contact the card issuer and try to negotiate a lower interest rate. You will have better luck if you are in good standing.
  • Switch to a card with no annual fee. Look for a card from the same issuer with no annual fee. Alternatively, you can try trading with no annual fee for the same card.
  • Transfer to a card with zero APR introductory rate. To save money on interest, check out transfer the balance to a card with an introductory rate with zero APR. If you are able to pay off the balance before the introductory rate ends and the standard rate kicks in, it may be a good idea to make the switch. Note that there is often a balance transfer fee, which is a percentage of the amount you owe on the card. So you’ll want to do some basic math and look at the fees to see if it’s worth it.
  • Keep the map open, but use it sparingly. If you want to keep it open, give it a specific purpose and use it occasionally. Set limits on how much balance you can keep or aim to pay it off in full each month. If you want to keep an active credit card but have no intention of using it at all, inactive accounts can be closed by the creditor. To keep your account active, make a small purchase once in a while and pay off the balance.

Is canceling your credit card wise?

It might be a good idea to cancel a credit card when it’s costing you too much money or hurting your credit score in some other way. However, since canceling a credit card usually hurts your credit, if you decide to close your card, you can do so in a way that minimizes the damage to your credit report. Weighing the pros and cons can help you make the best choice based on your financial situation.