CREDIT CARD HELP: The basic fundamentals of credit cards

Preventing and handling credit card debt

How to cancel a credit card

With care, you can close an account without hurting your credit score

By Fred O. Williams

Fred O. Williams
Senior Reporter
Expert on consumer credit laws and regulations.

You want to cancel your credit card. Before you pick up your scissors, know this: Canceling a credit card the right way involves more than simply snipping it in two. It requires you to follow specific steps to close the credit card account for good with the least damage to your credit score.

Should you cancel your credit card? Probably not

The first question to ask yourself before canceling a card is: Do you really need to cancel it? Or would it be better to just put it away and not use it? Having an available line of credit on a card with no balance always helps your credit score, and it could come in handy down the line should its terms improve, or in an emergency.

However, there are two occasions when closing a credit card is called for:

  1. You can’t control your spending and need to remove the temptation.
  2. You are paying an annual fee for a card you do not use.

In those cases, it makes sense to cancel cards, since they are unnecessarily costing you money.


Video: Four times you should close a card

First step in canceling a card: evaluate impact on credit score

Prior to closing any credit card account, you need to consider the possible effect on your credit score. Just because you cancel a credit card doesn’t mean that its payment information comes off your credit report right away.

In the case of open accounts, positive credit data can stay on the credit report indefinitely. Closed accounts with zero balances and no associated negative information typically remain on a credit history for 10 years from the date they are reported closed. “This allows the positive information to remain longer than most negative information,” says Rod Griffin, director of public education with credit bureau Experian.

That’s because bad marks on your credit report have an expiration date. Under the Fair Credit Reporting Act, negative data such as late payments and foreclosures must come off the credit report after seven years.

Says Griffin, “If the account is never again positive, is charged off and sent to collections, the original account and any subsequent collection account will be deleted at that time.”

In addition, potential lenders take into account the amount of credit still in use once a card and its associated credit limit gets canceled. That’s because credit bureaus and lenders are interested in what is known as a balance-to-limit ratio, also known as your credit utilization ratio, which compares the amount of credit being used to the amount of total credit available to the borrower.

“The ratio is more important today than how much available credit you have,” Griffin says. From a lender’s standpoint, “a low balance-to-limit ratio is a strong indicator of good credit risk,” he says. To offset the closure of one account, for example, you can request a credit limit boost on another card in order to maintain the ratio. 

Depending on your total available credit, closing a credit card account with a high credit limit could hurt your credit score, particularly if you have high balances on other cards or loans. To make sure closing one card doesn’t impact your score, pay off balances on all other cards. If you have zero balances, your credit utilization rate is zero, and won’t be impacted by the loss of a balance. However, experts say this step may be unnecessary for most people.

“If a person established good credit, the impact of card closure should be minimal and short-lived,” says Christina Goethe, spokeswoman for FICO, the provider of the most commonly used credit score. 

"If a person established good credit, the impact of card closure should be minimal and short-lived."

Old credit is the best credit

The age of a credit card account is also an important consideration. “The time an account has been open is a factor in credit scores,” Griffin says. “A longer positive history is beneficial to credit scores. So, closing an older account in theory could have a more negative impact.”

How negative? There’s no single answer, Griffin says. “Credit scores weigh everything in a person’s credit history in relation to each other. So, for one person, closing an older account can represent higher risk than it does for another person solely because of the unique nature of their overall credit histories.” If you are young and have a short credit history, closing the account could hurt your overall credit score more than if you were someone in their 50s who has a much longer credit history. As stated earlier, closing the account doesn’t wipe that account history off your report, so if you open a new credit card with more attractive terms to replace the card you’re canceling, your credit score won’t take a big hit.

How to cancel a credit card the right way in 7 steps

  1. Know the number of the customer service department you need to contact.
  2. Before making the cancellation call, redeem any remaining rewards so you ’t lose them.
  3. If the card has a balance, pay it off in full or transfer it to a card with better terms.
  4. Call your bank, confirm your card is balance-free and ask to cancel it.
  5. Send a letter requesting card account closure, just to ensure it happens.
  6. A month following the cancellation call, check your credit report to make sure the account is marked “closed.”
  7. Take notes throughout the cancellation process in case something goes wrong.

Provided you have considered these issues and have another credit card you can make charges on, you are ready to cancel your credit card. Closing an account the right way takes a little time, patience and organization. Use the following steps (and this would be a good time to print out the “Cancel a credit card worksheet”).

1. Know who to contact.

To begin the process of closing the account, gather and write down the customer service number and the mailing address you’ll need. The customer service number is on your credit card, monthly statement and the issuer’s website; the mailing address is also on the website and the monthly statement.

2. Remember to redeem rewards.

In the case of rewards cards, it is common to lose some accrued rewards when a card is closed, and this may be unavoidable. But with planning, it should be possible to minimize the loss. Check the rewards balance and redemption procedures on the issuer’s website. You may be able to take accumulated miles or points as a statement credit, if you are unable to apply them to travel or merchandise.  The best cash back cards generally have the easiest redemption features. However, most of them require rewards to reach certain thresholds -- usually $20 or $25 -- before you can redeem for a statement credit. A few cash-back programs award accrued cash only once a year, on a predetermined schedule. Knowing the rules for redemption will allow you to plan how to capture built-up rewards before you cancel the card.

3. Pay down your balance in full.

Pay off your credit card in full or, if you can find a balance transfer card with better terms, transfer the balance. You can’t completely close a card until the balance is paid. If you don’t want any more charges accrued to the card until the balance is paid, you can contact the issuer and ask that the card be frozen until the balance is cleared and the card closed. If you normally carry a balance from one month to another, you will need to pay the full statement balance two months in a row to wipe out the balance and stop further interest charges from accruing.

4. Deliver the news.

Once you reach the bank’s customer service representative, confirm that the balance on your credit card is zero. Do not assume that the balance is zero because you paid the total amount on your most recent bill. Interest may have continued to accumulate between the time the issuer sent the bill and your payment was made (that “leftover” amount is called residual interest).

Once you’re certain the balance is zero, inform them that you are canceling the card. While some credit card companies will allow you to cancel without even speaking to a representative, others may be less obliging. If you meet with resistance, hold firm, as it is your right to close the account. Tell the rep you want it noted that the account is being closed at your request. Ask for a name and address you can write to with a notice of your card cancellation and note this along with the call details, including date, time and a way to identify the representative you spoke to.

5. Send a letter.

For added insurance (in case the customer service rep makes a mistake), write a short cancellation letter to the card issuer. Request written confirmation of the account’s closure. The letter should include your name, address, phone number and account number, and details from your earlier phone call. Also, state that you want your credit report to reflect that the account was “closed at the consumer’s request.”

Being extra cautious isn’t a bad thing. Enclosed with the letter, include the check number (or a copy of the canceled check or other payment verification) that you used to pay off your account balance. Make a copy of the letter for your records. Send the letter via certified mail or with return receipt requested so you can prove the company received your letter.

6. Be patient.

Then sit tight. Getting the card canceled may take a month or more. After that time, take a look at a copy of your credit report to make sure the account is marked as “closed.” You can pull a free copy of your credit report once a year from each of the top three credit bureaus (Equifax, Experian and TransUnion) at You can also get a free credit score and report from If the account appears open, repeat the process: Call the customer service number to report the mistake, follow up with a letter by certified mail (including a copy of your original letter requesting that the account be closed) and then check your credit report again. If that fails, you can file a dispute through one of the three credit bureaus (they are required to notify the others). And if that doesn’t work, you can file a dispute with the Consumer Financial Protection Bureau.

7. Take notes.

As you go through the process of canceling your credit card, you may want to keep thorough notes on who you spoke to, what they said and when. That way, if anything goes wrong, you will have all the facts recorded. When you get a return receipt from your certified mail, put it with the log you are keeping and note the date the receipt comes in.

Although it may be worth temporarily holding off on closing a credit card if you are in the market for a new loan or mortgage, canceling a credit card shouldn’t be a source of major concern for consumers with good credit, since the resulting impact on their credit scores is likely to be minimal and temporary. “Usually it’s not a lasting impact,” says Griffin.

See related: Will canceling a new, unused card hurt your credit score?When can a card issuer close your account? Anytime it wants

CREDIT CARD HELP: The basic fundamentals of credit cards

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Updated: 11-19-2018