How to Cancel a Credit Card Without Hurting Your Credit Score

Cancel credit card accounts without dinging your credit.

Whether you want to avoid a high annual fee, limit your spending, get rid of unused credit cards or simplify your financial life, there are plenty of reasons to cancel a credit card. Canceling a credit card can have a negative impact on your credit score; you’ll need to do more than just cut up the card up and throw it out if you don’t want to ding your score in the process. The good news is 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.

Deciding Which Credit Card to Cancel and Which to Keep

When you’re deciding which card to cancel, think about how each of your cards affects your credit score. Here are some tips to follow so you can choose the right card to cancel:

  • Don’t cancel your oldest card. Fifteen percent of your credit score is based on the length of your credit history. Canceling your oldest card will cause it to eventually fall off your credit report, make your credit history appear shorter than it is and damage your overall score.
  • Don’t cancel cards with the largest credit limits. Cards with larger limits help you keep a low credit-utilization rate — the difference between the amount of credit you’re using divided by the total amount you have available — which can affect up to 30 percent of your credit score.
  • Don’t close bank cards before retail cards. Major bank cards often have better rates, lower fees and higher credit limits than retail cards. Plus, retail cards that aren’t co-branded can only be used at a specific retail store.
  • Don’t cancel cards when you’re planning to apply for a large loan. Canceling a card could negatively impact your credit utilization rate or length of credit history. Wait until after you’re approved for the loan to close a card.
  • Don’t make a balance transfer unless you consider the impact. Although transferring a card’s balance to a different card with lower interest might seem like a great solution, it could ding your credit if the balance transfer wipes out most of the card’s available credit and affects your credit-utilization rate.

Closing a Credit Card Account

Simply paying off your credit card won’t automatically cancel the card. Here’s how to cancel a credit card correctly:

  1. Redeem any outstanding rewards before you cancel your card or you will likely forfeit them; stop any automatic payments as well.
  2. Pay off your card if possible. It’s usually possible to close an account when you have a balance, but don’t forget to continue making the credit card payments.
  3. Call the credit card company and tell the representative that you want to close your account.
  4. Follow up with a written letter sent via certified mail. In the letter, state that you want to close the account and request that the creditor reply with written confirmation that the account was closed at your request with a $0 balance.
  5. Check your credit report approximately 60 days after you close your credit card to make sure the account is closed and states, “Closed at consumer’s request” instead of stating it was closed by your creditor. Accounts noted as closed by a creditor can cause a negative impact on your credit. You can request a free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — once a year through AnnualCreditReport.com.

Learn: How to Read Your Credit Report

Other Considerations

Keeping cards open that are most beneficial to you is as important as closing those that aren’t. Here are some additional tips to consider before closing credit card accounts:

  • Don’t cancel cards that are valuable to your lifestyle. For example, a card with a higher annual fee might be worth keeping if it provides you with valuable rewards. If you’re in the habit of carrying a balance, a card that features a low-interest rate might be worth keeping open.
  • Ask for an incentive to keep your account open. Sometimes you might want to keep a credit card account open if you could tweak the terms or fees a bit. You can call the credit card issuer and say you’re considering closing the account due to the APR or high annual fee. Many credit card companies offer a bonus offer or other incentive to get their best customers to keep their accounts open, and you might find the offer compelling enough to change your mind.

Up Next: 9 Ways to Raise Your Credit Score in 2018

Cynthia Measom contributed to the reporting for this article.