How To Cancel A Credit Card?

Closing old and unused credit accounts can help you avoid unnecessary fees and guard against identity theft. However, it can also cause your credit scores to drop if you aren't careful. Anyone can take scissors to a credit card, but it takes skill to cancel a card without nicking your credit score. Here’s everything you need to do in order to cancel a credit card successfully.

When should I cancel my credit card?

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 in an emergency or if its terms improve in the future. However, there are two occasions when closing a credit card is called for: One is when you can’t control your spending and need to remove the temptation, and the other one is when 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.

What should I do to cancel my unwanted credit card?

Pay off any remaining balance.

Pay off your credit card balance in full prior to canceling your card. While you may be able to close an account with a balance — some issuers allow account closures for new charges while you pay off a balance — we recommend you pay it off in full. This ensures you don’t forget about any balances or incur fees.

Redeem any rewards

If you cancel a rewards credit card, any unused cashback, points or miles may be forfeited upon account closure. It’s a good idea to redeem or transfer those rewards before closing your account so you don’t lose out on the rewards you earned. Review the fine print of your card’s rewards program so you know the redemption terms. For example, travel credit cards may allow you to transfer points to hotel or airline loyalty programs or to family or friends.

Call your bank

After you paid off your balance and redeemed any rewards, it’s time to start the cancellation process. Call the number on the back of your credit card to speak to a representative. Once you’ve confirmed the balance is zero, tell the representative you’d like to permanently close your account. The representative may try to discourage you or present a retention offer, but at the end of the day it’s your decision, so reconfirm that you want to cancel your account.

Send a cancellation letter

It may seem old-school to mail a cancellation letter after you just called, but it’s a key step that shouldn’t be overlooked. Odds are the representative you spoke to closed your account, but there’s always the chance of a mistake or computer glitch. Follow up with a brief letter to your card issuer stating your desire to close the credit card. Include that you want the account to be “closed at consumer’s request” and include your name, address, phone number, account number, and the details of your call with the bank’s representative.

Check your credit report

Remain patient as it can take a month or more for your credit report to reflect a canceled credit card. Once you see the closed account on your credit report, verify that the reason for closure is “closed at consumer’s request,” or something similar. If you see a different reason, such as “closed by the issuer,” contact your bank to resolve the issue since it can potentially harm your credit score.

Destroy your old card

After your account is officially closed, you can destroy your card. The simplest way to do this is to put your card in a shredder. You can also cut it into tiny pieces.