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How To Cancel a Credit Card: The Safe Way

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There are plenty of reasons to cancel a credit card. But canceling can have a negative impact on your credit score, so you’ll need to do more than just cut up the card 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.

How To Cancel a Credit Card Safely

Simply paying off your credit card won’t cancel the card or your account. Follow these steps to cancel a credit card correctly:

  1. Redeem any outstanding rewards before you cancel your card. Otherwise, you will likely forfeit them.
  2. Stop any automatic payments that use the card. Set up a different card or your bank account as the new payment method.
  3. Contact the credit card company to find out your pay-off amount. Although your statement shows your balance as of the date the statement was prepared, you might have accrued additional interest or fees since then.
  4. 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.
  5. Call the credit card company. Tell the representative that you want to close your account. Ask that the credit card company report to the credit bureaus that the account was closed at the customer’s request.
  6. Follow up your phone call 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.
  7. Check your credit report to make sure the account is closed. You should do this approximately 60 days after you cancel your credit card. Verify that the report indicates that the account was closed at the consumer’s request instead of stating that it was closed by your creditor. Accounts noted as closed by a creditor can cause a negative impact on your credit.
  8. Destroy your card. You should do this once you’ve verified that it has been canceled.
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Good To Know

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. All three of these credit bureaus are also offering free weekly credit reports during the COVID-19 pandemic.

When To Cancel a Credit Card

Any number of circumstances might warrant canceling a credit card. For example:

An online credit score simulator can help you determine what effect certain actions, including canceling a credit card, might have on your score. In addition to helping you decide whether canceling is worth a lower score, a simulator can show ways to offset the impact, such as by opening another card, increasing a credit line or paying down a balance.

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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:

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Advice

You should also avoid canceling cards when you’re planning to apply for a large loan. In the event that canceling a card negatively impacts your credit utilization rate or the length of your credit history, and therefore your score, it could make you ineligible for the loan. Wait until after you’re approved for the loan to close a card.

Other Considerations

It’s important to keep open cards that are most beneficial to you, just as it’s important to close those that aren’t. Here are some additional tips to consider before closing credit card accounts:

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Cynthia Measom and Michael Keenan contributed to the reporting for this article.