Whether you’re upgrading to a new credit card, getting a balance transfer or simply reducing the number of cards in your wallet, there comes a time when you need to cancel a credit card. But it’s not quite as simple as cutting your card in half. We go through how to properly cancel a credit card, how to contact the providers, what to consider and how it could affect your credit.
Follow these steps to cancel your credit card successfully:
- Pay the outstanding balance.
Avoid closing a credit card with a balance. While you can close a card with a balance, the bank could increase the interest rate or demand full and immediate payment. If you plan on transferring your balance to a new card, wait until the transfer has gone through before your close the card.
- Transfer any reward points.
If your card offers rewards, redeem or transfer them to another eligible account before you request to cancel the card. Once you close the account, all unclaimed points are forfeited.
- Cancel direct debits.
To prevent reactivating your card, cancel all existing direct debits linked to your credit card. Even if you’ve requested for an account to be closed, a direct debit can reactivate a canceled card.
- Cancel your credit card online.
Every credit card provider offers its own way of canceling credit cards online, with some more difficult than others.
- Cancel your card.
Once you’re ready to cancel your card, the provider will either require you to call directly or cancel online. Most providers want to talk to you to offer lower APR or annual fees to get you to stay with them. So if you’re dead set on canceling the cards, be ready to stand your ground. Once you cancel, make a record of the date, time, and name of the representative you speak with.
- Cancel your card in writing.
Other providers make it even harder to cancel by requiring that you send a written request. Ask for the address over the phone, and include your credit card number and account number in the letter. You should receive a letter confirming the closure of the account.
- Check for future statements.
Try to log into your account or go through your credit card statements following your request to make sure that the card is definitely canceled.
- Destroy your credit card.
Cut the card into tiny pieces to make it impossible for anyone to piece it back together. For added security, discard the pieces at different times or places.
You should receive a cancellation confirmation by mail. If you don’t, follow up with your lender using details from your first phone call.
What should I do with my points?
In this situation, points are use-it-or-lose-it. That means if you cancel your card while you still have points, you’ll lose all of your rewards.
Here are a few options to consider for your points before closing your card:
- Use Pay with Points. This basically means you’ll use your points to pay down your credit card balance. It’s a perfectly fine option, giving you a 1-cent-per-point rate. The problem is, you won’t get the highest rate possible.
- Transfer your points. If your card lets you transfer your points to airline or hotel partners, consider this route. Think about what you’re likely to book with before transferring, or you could leave your points marooned in a program you’ll never end up using. Alternatively, you can transfer your points to an eligible Chase Ultimate Rewards card.
- Open an eligible card that lets you keep your points active. If you open the Chase Freedom Flex℠, for example, your points will stay active. This could be a good route if you currently have an annual-fee card and want to pay no annual fee.
Each bank has a slightly different process for canceling a credit card. Check out our guides below that give you instructions on how to cancel your card with a specific bank, and see if they allow you to cancel without calling.
The phone number on the back of your credit card is usually a good bet, but here are details for contacting the major card companies to cancel your card:
|Bank of America||800-732-9194|
Here are how a few major credit card companies let you cancel online.
Use its secured message center to cancel your credit card online.
- American Express.
Use its Live Chat functionality on site. It typically appears as a question mark in the corner of your screen.
Use its Contact Us form.
Expert advice on canceling cards and your credit report
We spoke to Katherine Craig, Public Relations Manager of Equifax, to get insights on how canceling a credit card could affect your credit report. She says your priority should be settling outstanding payments or mistakes on your account before you go to close it so that you can avoid default listings.
“If you have a default on your credit file, it is a smart thing to pay the debt. Your credit report will then record the default as having been paid (and the date on which it was paid). It may impact your ability to get credit or get it at the most valuable price, but it is certainly better than leaving it unpaid.”
So what about canceling one card and applying for another? If that’s your goal, Katherine recommends limiting your applications to reduce the impact on your credit rating.
“Credit reports don’t show the type of credit, or whether it was granted or taken up, what your current credit limit is or if it is now closed. However, too many applications for credit can impact a lender’s view — it may actually appear to the banks that you have a lot more active credit commitments than you do.” If you’ve submitted too many credit card applications in the recent past, Katherine suggests that you wait from three to six months before applying again.
Canceling your credit card can be good if you’re looking to control your spending and get a better grip on your budget. But before you make that move, consider how it can affect your credit.
Simply canceling a credit card doesn’t mean your payment information disappears from your credit report. That can be both good and bad news.
If you’ve made late payments or have any other negative information on your credit card, that data stays on your credit report for seven years. If you’re closing an account with positive account history, positive credit data stays on your credit report for 10 years from when the account is closed. This allows good credit information to stay longer than negative, giving you the chance to improve your financial situation.
Credit utilization ratio
Another way that closing your credit card can affect your credit score is by changing your balance-to-limit ratio or credit utilization ratio. Credit bureaus are interested in your total credit available and how much of that you’re using. A low ratio is a strong indicator of good credit risk.
So closing a credit card with a high spending limit and a zero balance could hurt your credit score, especially if you have high balances on other cards or loans. If you want to cancel your card because of an annual fee, offset the ratio by either requesting a credit limit increase on another card or paying off balances on other cards.
Age of your credit card
When it comes to your credit cards, age matters. The amount of time your credit card has been open affects your credit score and is beneficial if you have a positive credit history. So closing that credit card you’ve had since college can actually hurt your score if you have a positive payment history.
If you recently submitted your application for a new credit card, you might be able to cancel your card application before you’re approved.
Here are a few other things to consider before closing your account:
- Note the annual fee.
Check when your annual fee is charged and if it will affect your final payment.
- Pay off everything you owe.
If you have a balance on your card, it means you still owe money to your provider. Clear your balance to close your card. A balance transfer credit card can help you move the balance off of the original card so that you can close it.
- See if you can negotiate better terms.
Consider why you’re closing your card, and think about negotiating with your card issuer to get a better deal. Don’t want to pay an annual fee or want a lower interest rate? Just ask, and your issuer might oblige.
- Consider your credit.
Closing your account can decrease your total credit, and your credit utilization ratio may go up. Also, positive payment history you’ve accrued with your card won’t factor as heavily once you close your card. As a result of these factors, your credit score may decrease. Keep this in mind if you’ll be applying for another credit product in the near future.
- Update your credit card for relevant services.
You may be using your card as a payment method for services that charge you regularly. To avoid interruptions in service, add a different card.
To be certain that your account is closed, consider writing a cancelation letter. In your letter, you should include:
- Your name and address.
- Credit card number.
- Cancelation date and the name and ID of the representative you talked to.
- Request for an account closure confirmation letter.
How do I get my annual fee back?
If you’re paying an annual fee for your card, you may get a refund. Notify American Express within 30 days of the closing date of the billing statement. If you cancel after 30 days, or if your mailing address is in Massachusetts, you won’t get a refund.
Instead of canceling, you might consider downgrading your card. This can help you by keeping your credit line intact and maintaining your average age of credit. Plus, it can help you save money if you’re currently paying an annual fee.
Keep these points in mind:
- You can usually downgrade only to similarly branded cards. If you have the Chase Sapphire Reserve®, for example, you probably can’t downgrade to the Marriott Bonvoy Boundless® Credit Card. You’ll likely have to pick the Chase Sapphire Preferred® Card or another Chase Ultimate Rewards product.
- Time matters. You can downgrade only if you’ve had your card for 12 months or more.
- Personal to business doesn’t work — and vice versa. If you want to downgrade a personal card, you must downgrade to another personal card. The same goes for a business card: You must downgrade to another business card.
If you’ve got a credit card that’s not working for you anymore, you may want to find one that’s more suited to your needs. There are so many credit cards on the market with no annual fee, low APRs, rewards and frequent flyer miles and 0% balance transfer offers.
You may be canceling your old card because of high fees, unfavorable interest rates or lack of rewards for your spending. Assess your financial needs to find the right credit card that prove invaluable for years to come.
Why would I cancel my credit card?
People cancel a credit card for many reasons. Some of the most common reasons you might want to cancel your card could include:
- The introductory APR offer or $0 annual fee period is about to end.
- You want to cut down on your interest charged.
- High annual fee for a card you’re not using.
- It’s been lost or stolen.
- To control your spending.
I can no longer use my card because my bank blocked it for non-payments. Do I still have to pay the annual fee?
Yes. If your credit card attracts an annual fee, you have to pay it as long as the account remains active.
I want to cancel two credit cards I currently use. Will this have a negative effect on my creditworthiness?
Canceling your credit cards may negatively impact your credit if it changes your credit utilization ratio. Credit bureaus view more available credit favorably, so you may want to consider keeping those accounts open or opening another card.
You might also be interested in: