How to cancel your credit card


Your lifestyle and financial goals are bound to change dramatically over the years—and how you spend and use your credit cards will, too. You may prioritize cash back now but prefer free airfare and valuable travel credits down the road. The credit cards you swipe today may be completely different from your daily drivers even a few years from now.

You’ll almost certainly cancel a credit card or two as your credit card lineup evolves. Let’s look at how to cancel a credit card (and why you shouldn’t be so quick to do it).

Reasons to consider canceling a credit card

There are plenty of reasons to cancel a credit card. For example:

  • High annual fees
  • You no longer use the card
  • You want to proactively limit your spending capacity
  • You’re paring down open accounts following an identity theft incident

While those are good reasons, you should still rethink permanently closing your credit card. In fact, you should try not to cancel it because doing so can cause your credit score to take a hit. While that sounds counterintuitive, it’s the truth—which we’ll go into shortly. 

Jason Gaughan, head of consumer credit card products at Bank of America says that, instead of canceling a card, you can explore alternatives with your card issuer. “You can inquire about upgrading or downgrading your current card to align with your changing needs without hurting your credit.”

This strategy is key. If your card does charge an annual fee, investigate whether there’s a no annual fee credit card to which you can downgrade. For example, the Citi Premier® Card charges a $95 annual fee. If you’re tired of paying that fee, you can call Citi and ask for your card to be downgraded to the no annual fee Citi Custom Cash® Card. Then you can keep it forever without having to pony up each year.

Does canceling a credit card hurt your credit?

Canceling a credit card can hurt your credit score in more ways than one. Several important factors that determine your score are adversely affected.

Let’s quickly examine what closing a credit card does to your credit.

Credit utilization

Your credit utilization is simply the percentage of your available revolving credit that you’re using. General advice is to keep your credit utilization below 30%. Anything higher can  be detrimental to your credit score. And because credit utilization makes up a whopping 30% of your score, it’s really important to keep your balances low.

Let’s say you’ve got two open credit cards, each with a $10,000 credit limit:

  • One card has a $4,000 balance
  • One card has a $0 balance

In this scenario, you’re using $4,000 of your $20,000 in available credit. That means your credit utilization is 20% ($4,000 balance / $20,000 credit line). But if you were to cancel the above credit card with a $0 balance, your available credit would drop to $10,000—meaning your new credit utilization would be 40% ($4,000 balance / $10,000 credit line).

Length of credit history

The length of your credit history counts for 15% of your credit score. This is also known as the “average age of accounts,” and the longer the average age of your credit cards, the better.

The longer you’ve had a card, the more cautious you should be when considering it for the “cancel” stack. The credit accounts you’ve kept the longest can boost your score, as they show a longer track record of responsible credit management. Of course, if you’re being charged an outsized annual fee you don’t want to pay, you should still absolutely get rid of it—or downgrade it to the no-annual-fee version, if possible.

Credit mix

If you’re considering canceling your only credit card, it will affect your credit mix—a factor that accounts for 10% of your credit score. Credit mix rewards you for having different types of credit. For instance, showing you have a credit card, mortgage, and personal loan is more valuable to your score than just a single loan type.

In many situations there is value to keeping a credit card open beyond the credit history and extra chunk of available credit it offers. “Your life does change and circumstances change,” says Leslie Tayne, founder and debt relief attorney at Tayne Law Group. She finds value in keeping cards open beyond just the credit score implication. “Sometimes there’s a credit card that I just put away, and I don’t use it for months on end. And then I say, ‘You know what—I have a use for it now!’” As with most things in life, your financial goals tend to ebb and flow.

How to cancel a credit card

If you’ve decided to cancel your credit card, here’s what to do. 

1. Pay off your outstanding balance

Before you close a credit card, try to ensure that it’s not carrying a balance. Canceling the credit card won’t magically erase your debt, and your balance will still accrue interest whether your card is open or not. Your card issuer will continue to send you monthly statements for closed cards until the balance is paid in full. 

2. Use your remaining rewards

When you close a credit card, you’ll generally lose all the unredeemed cash back, points, and miles you’ve earned. Before you cancel, ensure you’ve zeroed out any rewards linked to your card.

You can also salvage some credit card rewards by transferring them to another card that collects the same type of rewards (if you’ve got one). For example:

It’s also important to realize that many credit cards collect rewards that don’t “live” on the card. They instead accumulate in a different loyalty account. For example, you won’t lose the miles you’ve earned on the United℠ Explorer Card when you close it because they’re credited to your MileagePlus account as they’re earned.

3. Stop your recurring payments

If you have any accounts that use your credit card for automatic monthly payments, you’ll want to update your payment method before canceling the card. Some common accounts that may need updating include streaming accounts, utilities, insurance premiums, or any other recurring expense assigned to the card you’re closing.

4. Call the card issuer to officially close the account

While it’s possible to cancel some credit cards online, it’s a better idea to call your card issuer. This way, you can be clear on your card’s current balance and potentially request a refund (or partial refund) for your annual fee—especially if it’s early in your cardmember year.

It’s also a good practice to request some form of correspondence (email or letter) confirming that you’ve canceled your card.

5. Monitor your credit report for closure

Keep an eye on your credit report to see if the account has been reported to the credit bureaus as closed. You don’t want an open credit line in your name floating around in the ether without your knowledge. Plus, if your card incurred an annual fee, you don’t want a surprise bill for renewal down the line.

It could take a couple of months for your closed account to reflect on your credit profile. Around 60 days after you cancel your card, request a credit report. You can get one from each of the three major credit bureaus for free annually (and once weekly through the end of 2023, according to the Federal Trade Commission).

6. Destroy the card

Credit cards contain sensitive information—whether printed on the card or coded in the chip or magnetic strip. When it’s time to dispose of your inactive card, you’re going to want to destroy it. You can feed a plastic card through a shredder or cut it up with scissors. To be doubly safe, scatter the shards in multiple trash bags.

If you have a metal credit card like The Platinum Card® from American Express, you’ll have a tougher time destroying it. The bank will often send you a prepaid envelope to mail your card back to them. Or, you can drop it off at a branch.

The takeaway

If possible, avoid canceling your credit cards. Each one plays a role in your overall credit health, including credit utilization, length of credit history, and credit mix. If your motivation for canceling is to avoid an annual fee, ask your issuer if you can downgrade your credit card to a no-annual-fee version.


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