How to cancel a credit card, without destroying your credit score

J@vier M@rceli

Sarah Tew/CNET

If you find yourself with too many credit cards or you’ve been racking up too high a balance on them, you might be mulling closing a credit card. While doing so might make your life easier, there are some complications to consider.

Contrary to what TV sitcoms might have taught you, canceling a credit card involves more than just shredding the physical card and tossing it in the trash. Further, it could hurt your credit score by impacting your length of credit history and credit utilization rate. We’ll walk you through how to cancel a credit card without destroying your credit, when closing your credit card is a good idea and alternative routes to consider.

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

Closing your credit card accounts usually dings your credit in two ways — by changing your length of credit history and affecting your credit utilization rate — two factors that help determine your credit score.

It changes the length of your credit history

Your length of credit history makes up 15% of your credit score, and it includes the age of your oldest card, your newest card and the average age of all your cards. A longer credit history can boost your score. 

Closing your oldest card could shorten your average and bump down your score. But the impact won’t happen right away.  Typically, a closed credit card in good standing will stay on your credit file for 10 years, so it could be a while until closing an older card account dings your score. 

It can raise your credit utilization ratio

Your credit utilization can be found by dividing the balance on your cards against the total credit limit on all your cards. For instance, let’s say you’re carrying a balance of $500 across 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 0.10 or 10%). If you close a card with a $1,500 credit limit and $0 balance, your credit utilization rate would rise to 14% ($500 divided by $3,500). 

The higher your credit utilization, the riskier you seem to creditors and lenders. That’s because it might be a warning signal that you’re in financial hot water or are having problems keeping up with your bills, so you’re resorting to plastic. So where should your credit utilization hover? The rule of thumb is to aim to keep it under 30%. Credit utilization makes up 30% of your credit score, so it’s important to keep your utilization low if you want to maintain a solid score.  

When closing a credit card makes sense

So is it bad to close a credit card? Not necessarily. While it could put a dent in your score, there are a few instances when it might make sense to do so:

  • High APR. If you’re running a high balance and are only making the minimum payments on your card, and the amount of interest you’re paying on a card is getting substantial, it might make sense to close that card. 
  • High fees. It might make sense 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 overspending. If your balance keeps increasing and incurring interest, cancelling your card might be the smartest move to avoid digging yourself into debt.
  • Divorce or separation. If you had a joint credit card with a spouse or significant other and are going through a breakup, then closing your credit card could help keep your finances straight and avoid your soon-to-be ex putting unwanted purchases on a joint card. 
  • Outstanding debt. If you have outstanding debt that you’re having a hard time paying down, or are getting on a debt management plan that requires you to cancel your credit card accounts, this may be unavoidable. While your credit will likely take a hit, closing these accounts so you can focus on other debt payments could set you up for long-term success. 

If you can resist temptation and avoid touching your credit card entirely, you could keep your card open while focusing on other debt, or making slow headway paying off outstanding balances. 

How to close a credit card the right way

If you do need to cancel a credit card, there’s a process you should follow. 

1. Pay off your balance

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

2. Redeem any existing rewards

Any rewards points you earned while using your card will often vanish once you close a card. Depending on the card, you might be able to transfer your points to another card or cash back rewards program. So enjoy those reward points before you cancel. 

3. Call the credit card company 

To officially cancel, call the number on the bank of your card and talk to someone from 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 your reasons for closing your account.  

4. For extra protection, send a letter of cancellation

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

5. Check your credit report

Before you close your card, check your credit report 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 — from

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

After you’ve closed your account, it’s a good idea to review your credit again and watch for errors. Common errors that could pop up after you’ve canceled a card include an account showing up as being open and active even after you closed it, or your credit report missing the “closed by grantor” notation. It should be clear that the account was closed by the creditor. 

6. Safely dispose of your card

Once you’ve properly closed your account, it’s safe to get rid of the card. Shred your card and make sure the sequence of numbers is unrecognizable. 

Alternatives to consider

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

  • Negotiate for a lower rate. If a high APR is the impetus for closing your account, reach out to someone from the card issuer and try to negotiate a lower interest rate. You’ll have a stronger chance if you’re in good standing. 
  • Downgrade to a card with no annual fee. Look into a card with the same issuer with no annual fee. Alternatively, you could try negotiating for no annual fee for the same card. 
  • Transferring to a card with a zero APR intro rate. To save money on interest, look into transferring the balance to a card with an intro rate with zero APR. If you’re able to pay off the balance before the intro rate ends and the standard rate kicks in, it could be a good idea to make the transfer. Note that there’s 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 into the fees to see if it’s worthwhile. 
  • Keep the card open, but use it sparingly. If you want to keep it open, designate a specific use for it, and use it on occasion. Set limits on how much of a balance you can keep on it, or aim to pay it off in full each month. If you want to keep a credit card active but don’t intend to use it at all, inactive accounts can be closed by the creditor. To keep your account active, make a small purchase every so often and pay off the balance. 

Is canceling your credit card wise?

It could be a smart idea to cancel a credit card when it’s costing you too much money or hurting your credit score in other ways. However, as canceling a credit card typically dings your credit, if you are going to close your card, you can do it in a way to minimize the damage to your credit file. Weighing the pros and cons can help you make the best choice for your financial situation. 

Next Post

How to do keyword research: a guide for beginners

Keyword research is the foundation of any search marketing strategy, but where do you start with this daunting task? If, like myself, you are new to the Search Engine Optimisation (SEO) game, knowing where to start with keyword research can be challenging. Search intelligence specialist Pi Datametrics refers to it […]
How to do keyword research: a guide for beginners