Cancel a Credit Card
If your credit card is costing you too much money or you just have too many of them, you may decide that it's time to close the account. This is a relatively easy process that can be done almost entirely over the phone. Because canceling a credit card can affect your credit score, it's important to be strategic about it and do whatever you can to defend your credit.
Contents
Steps
Contacting Your Credit Card Issuer to Cancel the Card
- Pay it off first. Before you cancel your credit card, it's a good idea to make sure that you pay off the existing balance and stop using the card. If you can't afford to pay it off, you can transfer the balance to another card that you do not plan on canceling.
- When you call to cancel your card, confirm that there is no balance on it.
- In addition to paying off your balance, you should also make sure that you cash out all of your rewards. If you forget to do this, they will likely be lost forever.
- Call the customer service department. In order to cancel your card, you will need to contact the issuer's customer service department. The number can usually be found on the back of your card, on your bill, and online. Once you are connected to a customer service agent, let them know that you would like to close your account.
- Have your credit card and a bill in front of you when you call. This will ensure that you will have all of the information you will need.
- The representative may ask you why you want to close the account. You can give any reason you like, including that you do not use the card. It is your right to close the account for any reason at all.
- If possible, get the representative's name or ID number and write it down, just in case you have problems later.
- Consider the counter-offer. When you call to cancel your card, the issuer may offer you something, such as a lower interest rate or more rewards points, to keep you as a customer. It may or may not be worth it to consider this offer, depending on why you want to cancel the card in the first place.
- It's a good idea to think about what it would take to change your mind about canceling before you call. This will make it easier for you to stand your ground if the offer isn't good enough.
- If the offer is good, you may want to consider canceling a different credit card instead.
- If you're on the fence about closing the card, you can try calling the customer service department and bargaining with them for better terms. For example, you might say, "I plan on canceling this card unless you can lower my interest rate to 15%."
- Confirm the cancellation in writing. If you end up canceling your card over the phone, it's always a good idea to send the company a letter as well. This will help ensure that the account is really canceled, even if the customer service agent you spoke to makes a mistake.
- The letter must include your name, address, and credit card account number.
- Include the date that you canceled the card and the name of the representative you spoke to in your letter, and request that the company send you a written confirmation letter indicating that the card has been canceled.
- You may want to include proof of your final payment, such as a copy of a check.
- Send the letter by certified mail with a return receipt.
Protecting Your Credit Score When You Cancel a Credit Card
- Pick the right time to cancel. Since canceling a credit card can influence your credit score, it's important to be strategic about when you do it. Avoid closing any accounts if you are in the process applying for new credit.
- If you are planning to buy a house or a new car, wait until after the loan is finalized to cancel your card.
- Consider off-setting the cancellation. In order to avoid hurting your credit score by canceling a card, you may want to off-set it by increasing your credit limit in another way. This will keep your credit utilization rate constant.
- You can do this by opening a new card or requesting a balance increase on an existing card.
- If you have good credit and low balances on your cards, this is less important. Closing a credit card should only have a small impact on your credit score.
- Choose the right cards to cancel. If you want to cancel a credit card simply because you have too many of them, it's important to think carefully about which one you should cancel. Canceling the wrong card could end up costing you more money or damaging your credit score unnecessarily.
- Cards that charge annual fees or have very high interest rates are usually the best options (unless these cards come with benefits that outweigh the high costs).
- Canceling the credit card that you have had for the longest is usually a bad idea because continuous credit looks good on your credit report.
- Look at your credit report after canceling. After you cancel your credit card, it's a good idea to request a copy of your credit report and look at it carefully to confirm that it reflects the fact that you have canceled the card. It should not say that the account was closed by the issuer, as this will look bad to other creditors.
- If your credit report is inaccurate, you will need to contact the credit card company's customer service department again and ask them to correct the way in which they reported the closure of the account to the credit reporting agency. Be sure to check your report again to make sure they fixed the problem.
Tips
- Once you've canceled your credit card, you can dispose of it by shredding it or cutting it into small pieces and putting it in the trash.
- There's no way to predict exactly how much of an effect canceling a card will have on your credit score, as it is considered along with many other factors. This is why it's best to avoid closing any accounts right before you plan on applying for a big loan.
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