How to cancel a credit card

Do you have a credit card that you don’t use much anymore? Or one that doesn’t give you the kind of rewards you want these days? There are lots of reasons why you might want to close a credit card. 

But before you do, it’s important to make sure you understand how closing a card might affect your credit. Hint: It may not necessarily improve things. If you decide closing your card is the right move, here’s a look at how the process might work. 

Key takeaways

• Your cardholder agreement or your card issuer’s website is a good starting point when figuring out how to cancel your credit card.
• Some things you might have to do when closing your credit card include paying off the balance, contacting the card issuer and requesting a confirmation letter.
• Closing a credit card could have a negative impact on your credit scores.
• Among other alternatives to closing the account, you could consider upgrading or swapping to a new card.

Depending on the card issuer, you might be able to close a credit card with a balance on it. But you’ll still have to make at least the minimum payment on schedule until it’s paid off. Plus, you might continue to be charged interest on what you owe. So you might prefer to pay off the balance before you close the card.

Rewards—whether they come in the form of points, cash back or miles—are one of the major advantages of credit cards. It’s a good idea to make sure you know what will happen to yours if you close the card. 

In some circumstances, you may be able to keep them, and in others, you may lose them. You may also be able to cash them in, or you may be given a limited time to redeem them.

When you’re ready to close the account, you’ll need to call, visit, mail or email the credit card issuer. You might want to ask for written confirmation of the closure. It may give you a little more protection should anything get called into question later.

When a credit card is closed, it’s typically reported to the three major credit bureaus. You can check that the closure was reported properly by getting free copies of your credit reports at AnnualCreditReport.com. Bear in mind it can take some time for the cancellation to show up on credit reports. 

You could also use CreditWise from Capital One. It’s free, and using it won’t impact your credit scores. And with the CreditWise Simulator, you can even learn how your score might go up or down if you close a card.

You can help prevent identity theft by destroying the credit card once the account is closed. If your card is made of plastic, you can shred it or cut it into small pieces. If it’s made of metal, you might be able to send it back to the issuer for disposal. 

Closing a credit card can affect a couple of factors that go into your credit scores: 

Length of credit history

The longer a credit card has been open and used responsibly, the more beneficial it tends to be for your credit scores. That’s because it contributes to your length of credit history. And as the Consumer Financial Protection Bureau (CFPB) explains, “Credit scores are based on experience over time. The more experience your credit report shows with paying your loans on time, the more information there is to determine whether you are a good credit recipient.” 

Credit utilization ratio

The amount of available credit you have across all your revolving credit accounts is referred to as your credit utilization ratio. When you close a credit card, you lower your total available credit. And that can increase your credit utilization ratio.

According to the CFPB, experts recommend keeping your credit utilization below 30% of your available credit to avoid a negative impact on your scores. 

New credit applications

Closing one card and applying for a new one? When you apply for new credit, the lender runs a hard inquiry on your credit. This can lower your credit scores—usually by just a few points. But if you apply for multiple new cards at once, the impact may be greater. 

Before closing a credit card account, you can consider these options: 

• Upgrade or swap to a new card. Depending on your needs, you may be able to upgrade or swap to a different card with the same issuer. You may be able to keep your existing account history while finding a card with rewards or a credit limit that suits you better.
• Transfer your balance. If you’re hoping to consolidate your debt or potentially lower your interest rate, you might consider a balance transfer. Just be sure to factor in any fees or terms involved.
• Use your card for small purchases. If your card hasn’t been getting much use but closing it might hurt your credit, you could keep it active by setting up a small recurring purchase. This should prevent it being closed by the lender for inactivity. If your lender offers a card lock feature, you could even lock it to ensure accidental charges don’t pop up. For Capital One cardholders, it takes just a few taps on the Capital One Mobile app. And if you decide you want to use the card in the future, you can unlock it just as easily.

Here are some frequently asked questions about closing credit cards:

Is it bad to close a credit card?

There are lots of reasons why you might want to close a credit card, so there’s no set answer to whether it’s a bad or a good thing. If you’re struggling to make payments or you don’t use the card enough to justify the annual fee, it may make sense to close the account. Just bear in mind that closing a credit card may hurt your credit scores. 

Can you close a credit card with a balance?

You can close a credit card that has a balance. But you are still responsible for paying the debt you owe. You’ll continue to receive monthly statements, and the card issuer can charge interest on the debt.

Does it cost to close a credit card?

Some banks or credit unions may charge a fee to close an account under certain circumstances. You can check with your issuer to find out if they’d charge you to close your card.

Closing a credit card requires a few common steps and things to consider. If you’re considering swapping or upgrading your credit card, you can start by comparing Capital One card options. 

If you close the account, you can monitor the effect on your credit with CreditWise. It’s free for everyone, even if you don’t have a Capital One credit card. And using it won’t hurt your credit scores.