How to Cancel a Credit Card Without Hurting Your Credit Score

Play by credit card companies' rules to cancel a credit card the right way.

Whether you want to avoid a high annual fee, limit your spending, or simplify your financial life, there are plenty of reasons to cancel a credit card. Canceling a credit card requires more than just cutting it up and throwing it out, however, especially if you don’t want to ding your credit score in the process.

Canceling a credit card can have a negative impact on your score, but you can minimize the damage or, in some cases, avoid it entirely. Here’s how to cancel a credit card without damaging your credit score.

Tips for Canceling a Credit Card

To help avoid getting a ding on your credit score, carefully choose the best time to cancel your credit card. For instance, if you expect to apply for a large loan in the next few months, consider waiting until after you’re approved for the loan to cancel your card.

Pay the card’s outstanding balance in full before you close the credit card account because if you do it when there’s a remaining balance, it will still show up on your credit report. If you have to continue making monthly payments before you can pay it off, consider keeping the card open. That way, your credit report will show on-time payments as you pay off the balance. Alternatively, you could transfer the balance to a card you’re keeping open.

What You Need From the Credit Card and Credit Reporting Companies

Make sure you redeem any outstanding rewards before you cancel your card or you will likely forfeit them. In addition, call the credit card company to find out exactly how to close the card according to the company’s process. Many credit card companies offer a bonus offer or other incentive to get you to keep it open, and you might find the offer compelling enough to change your mind.

“It is best to call and close the account and get the name and ID of the person who is closing the account for you, as well as direction from them as to where you can send a letter that you want to close the account if you feel you need to be extra careful,” said Tracy Becker, CEO and president of North Shore Advisory, which provides credit repair and restoration services. You should ask for confirmation by email or mail that the account is closed, along with a statement that there’s nothing owed on the account, Becker said.

Check your credit report after you close your credit card to make sure it shows it is closed. Be patient, though; it can often take a month or more for the information to show up on your report. You can request a free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — once a year through

Related: How to Read Your Credit Report

Deciding Which Card to Cancel

When you’re deciding which card to cancel, think about how each of your cards affects your credit score. For instance, 15 percent of your credit score is based on the length of your credit history, so if you cancel your oldest card, it will eventually fall off your credit report, which isn’t ideal for your overall score.

You should also keep cards with the largest credit limits so you can maintain a low credit-utilization rate. Consider closing retail credit cards before bank cards because having a major bank card is viewed more favorably when it comes to credit scoring.

In addition, consider which cards have the best terms. For instance, you might want to cancel a card with the highest annual fee, but you should make sure that the benefits don’t outweigh that fee. If you carry a balance from month to month, you likely won’t want to cancel the card with the lowest interest rate. If, on the other hand, you pay your balance off every month, keep the card that gives you the best rewards.