“How to Cancel a Credit Card: A Comprehensive Guide”

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Consumer Credit and Finance Education by O1ne Mortgage

At O1ne Mortgage, we prioritize educating our clients about consumer credit and finance. This post aims to provide an objective view to help you make the best decisions regarding your credit cards. For more information, see our Editorial Policy.

Steps to Close a Credit Card Account

If you’re considering closing a credit card account, it’s crucial to ensure the account is ready before contacting your credit card company. Confirm that your request has been completed to avoid any issues.

Should You Close a Credit Card?

Closing a credit card might be the right decision if you’ve had trouble with overspending or if the card’s annual fee outweighs its benefits. In some cases, secured credit cards may require you to close your account to get your security deposit back.

However, closing a credit card can negatively impact your credit score, especially if it’s your oldest account. The loss of available credit could increase your credit utilization rate. While the account history will remain on your credit reports for up to 10 years, closing it will stop positive contributions to your credit score.

It’s essential to weigh both the benefits and drawbacks of canceling a credit card or keeping it.

1. Pay Off Any Balance

Technically, you can close a credit card with a balance, but interest and fees may still accrue until the balance is paid off. Your credit utilization rate may spike because you’ll still have the balance but not the available credit. Therefore, it’s a good idea to pay off your balance and check for pending transactions before contacting your card issuer.

2. Redeem or Transfer Rewards

Canceling a credit card usually results in forfeiting unredeemed rewards. Some credit card companies may provide a grace period, but it’s better to redeem all your cash back, points, or miles—or transfer them to another rewards program if possible—before closing your account. Check for pending rewards from your most recent statement cycle.

One major exception is if you have an airline or hotel credit card. In those cases, you earn points or miles directly with the partner airline or hotel loyalty program. Those rewards are subject to that program’s expiration policy and aren’t impacted by your credit card’s status.

3. Transfer Recurring Payments to a New Card

If you make payments for utilities, subscriptions, insurance premiums, or other recurring transactions on your current card, switch those over to a new credit card or other payment method. Once your account is closed, new recurring payments will typically be declined, which could result in late payment fees or canceled services.

4. Contact Your Credit Card Issuer

Once your account is ready for cancellation, reach out to your credit card issuer to submit your request. Depending on the card issuer, you may be able to submit your request over the phone, through a secure message in your online account, or via live chat.

You may be asked to provide a reason for the cancellation, and in some cases, the card issuer may offer an incentive to keep the account open. If you want to proceed, politely decline the offer and ask the representative to complete the request and provide a confirmation.

5. Destroy Your Old Card

To ensure no one gets access to your card or personal information, shred your credit card after it’s been canceled. If the card is made from metal, ask the credit card company to send an envelope, which you can return with the card for the card issuer to destroy.

6. Check Your Credit Report

Even after receiving confirmation from the credit card issuer, monitor your credit report until you see that the account is marked as closed. Ensure the account is marked as closed by the cardholder, not by the issuer. If the information is inaccurate, you have the right to file a dispute with the credit bureaus or contact the credit card company directly.

The Bottom Line

Closing a credit card account can potentially impact your credit score negatively, but it may be the right move if it helps improve your financial health. Take your time to consider all your options, then follow these steps to ensure you don’t lose your rewards or have to continue dealing with a balance.

If you’re thinking about replacing the card with a new one, O1ne Mortgage can help you compare credit card offers based on your credit profile, allowing you to compare options side by side.

For any mortgage service needs, call us at 213-732-3074. At O1ne Mortgage, we are here to assist you with all your financial needs.

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