How to cancel a credit card you no longer want
- Before you cancel a credit card, make sure you're clear on why you're doing it. Cancelling a credit card can impact your credit score, so in some cases it's better for your credit to leave a card open and inactive.
- Once you decide to cancel your credit card, you'll have to call your credit card company directly and request to cancel. Prepare yourself for a counteroffer, and make sure you're clear on the terms before giving them a green light.
- Be sure to follow up in writing, both by requesting a letter from the credit card company and by sending your own, confirming that you wanted this card to be closed.
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Cancelling a credit card might seem like no big deal, but there are a few things you should consider before doing so.
Here are some suggestions on how to make the right choice about your credit card, as well as how to actually close one, if you've decided that's the best thing to do.
How to cancel a credit card
1. Seriously consider if this is the right move
Closing a card could have a negative impact on your credit score, since things like your credit utilization rate and how long you've had your cards factor greatly into your credit score. You might also end up losing any rewards or points you've built up (more on this later).
If you're not paying a fee on the credit card you want to close, you might want to consider leaving it open and assigning just one regular payment to it, like your monthly cable bill, to keep it active. If a credit card is inactive for long enough, the issuer may take it upon themselves to close it - although they'll have to notify you before they do - so you'll want to make sure you're using it intermittently.
2. Make sure you still have a credit card to use
If you're closing your card because you have too many or are worried about identity theft on cards you don't frequently use, you might not need a replacement credit card. But if you've decided to close your main credit card for whatever reason, you'll want to research a solid new option before closing your current one.
Look for something that has a lower interest rate - or at least a similar one - and be aware of any annual fees. Consider what rewards are most important to you, too. If you can't find a comparable or better card, you might want to reconsider closing your current one.
If you're looking for a credit card, you might consider Business Insider's picks for:
- The best credit card rewards, bonuses, and benefits of 2019
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- The only rewards card most people ever need to open
3. Pay off your balance
Even though some cards do allow customers to continue making payments to a card they've actually closed, it's likely you'll pay additional fees and higher interest rates to do so. If you can't just pay the card off before closing it, consider transferring your balance to your new card - preferably one with a lower interest rate.
4. Verify what happens to any rewards you've accumulated once you close out a credit card
Some companies let you redeem points for a certain number of days after closing an account, some let you keep them if you have other cards in the same program, while others might make you immediately cash them in. Make sure you know what will happen to your rewards.
5. Prepare yourself for a counteroffer
Once you let your banking institution know that you want to close out an account, they could offer you some additional benefits to get you to stay. Consider ahead of time what it would take to get you to keep the card open - if anything - so you're prepared when/if that happens.
6. Call your credit card company
Find the customer service number for your credit card company and call to let them know you'd like to close out your credit card account.
Sorry, you can't do this online.
Verify the terms of closing your account and what happens with any rewards with the customer service representative, as well as asking any other questions you might have.
7. Ask for written notice of the account closure
If the customer service representative doesn't mention it, ask to receive a notice in writing - either via email or regular mail - about the details of your account closure.
8. Follow up with a letter to create a paper trail
Experts recommend following up in writing with a short letter including your basic details (name, address, phone number and credit card account number), as well as pertinent details about the account closing conversation. Include the fact that you would like it noted on your credit report that the account was closed at your request, and that you paid it off in full before doing so.
9. Check your credit report and score
Wait a few weeks after your account closure, then check your credit score and report. Your credit report will help you ensure everything was applied appropriately after the closure, while your credit score will alert you to whether or not any damage occurred from the closure.
You can check your credit score for free at any time at sites like Credit Karma, Credit Sesame, and Credit.com.
Your credit score is three-digit shorthand for the information contained in your credit report, which monitors all of your credit-related activity. According to the Federal Trade Commission, you're entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies: Experian, Equifax, and TransUnion.
Note that there are plenty of opportunities to pay for your credit report, but annualcreditreport.com is the best place to get your report for free (or call 1-877-322-8228).
- Read more about managing your money:
- How to get cash from a credit card
- How to open an Ally high-yield savings account
- How to calculate your debt-to-income ratio
- How to open an IRA for retirement