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How to cancel a credit card and protect your credit score

Canceling a credit card can be a straightforward process as long as you take the right steps.

Justin Cupler

Contributing Writer at Tally

March 11, 2020

Closing a credit card involves sensitive information, so it’s imperative to follow specific rules to do it correctly. Below are eight steps to closing a credit card, but let’s first address what negative impact closing a credit card can have on your credit score.

How canceling a credit card hurts your FICO credit score

There is no way to avoid it — canceling a credit card will likely harm your credit score.

First, it can result in increased credit utilization, which is the amount of credit card debt you have relative to your credit cards’ limits. Second, it can impact the average length of your credit history.

These factors play a major role in your credit score. As Experian notes, credit utilization accounts for 30% of your FICO credit score, and credit history length accounts for 15% of your FICO credit score.

There are some instances where canceling a credit card is the smart choice. Maybe the annual fee no longer offers any value or you struggle with not racking up charges on the card or perhaps you’re going through the financial proceedings involved in a divorce. Be sure it makes sense to cancel your credit card before doing so. 

How to cancel a credit card

Canceling a credit card isn’t overly complicated, but it requires a handful of steps and some follow-up on your end. Here’s how to cancel your credit card.

1. Determine the impact on your FICO credit score

Before deciding to close a credit card account, you’ll want to determine what effect it’ll have on your credit score.

Start by looking at the credit limit on the card you want to close and subtract it from the available credit on all your credit cards. For example, if you have a $5,000 credit limit across all your credit cards, and the credit card you want to close has a $1,000 limit, you would end up with $4,000 in total available credit across all cards after its closure.

Divide the balances on all your credit cards by this new $4,000 credit limit to determine your new credit utilization ratio. If closing this card increases your credit utilization to more than 30%, you may want to think twice about closing it, as it will likely lower your FICO score.

You’ll also want to look at how long you’ve had the credit card you plan to cancel and compare it to the average credit age on your credit report. Old credit has more of a positive impact than new credit. 

If your average credit age is higher than the amount of time you’ve had this card, closing it likely will not impact your credit. But if the card is older than your average credit age, closing it will probably hurt your FICO credit score.

2. Bring the credit card to a zero balance

Except in certain situations, including debt settlement, credit card companies will not allow you to close an account without first paying it off. There are several options to accomplish this.

The most straightforward payoff method is to create a payment schedule that’ll bring the account to $0 in the time frame you need it. You can streamline the process by scheduling automatic payments through your credit card company or a third-party payment system.

If you lack the available cash to pay off your card in a reasonable timeframe, you can also do a balance transfer. Ideally, you’ll have a 0% interest rate balance transfer card in hand so you can make the transfer without incurring a ton of interest. Keep in mind, though, these balance transfers generally come with a small 3-4% fee. For example, if you transfer $1,000, the fee will run $30-$40.

3. Redeem all rewards and cash back

If you cancel a rewards credit card with a points balance, you’ll likely lose those rewards points. Before canceling the credit card, log on to its rewards system and cash out those points for statement credits, discounted travel, free gift cards or whatever suits your needs.

If your rewards balance is too small to redeem online, you can call the credit card company to see what options you have. A customer service representative may be able to award you a smaller statement credit in return for these rewards.

4. Cancel any automatic payments to the credit card

If you have bills automatically charged to the credit card, you’ll want to cancel those automatic payments online or by calling the company. If you don’t cancel the automatic payments, your credit card issuer will decline the payments, and you could rack up late fees or end up having important services like electricity or internet disconnected.

5. Call the credit card company

The next step is to officially start the credit card cancelation process, which involves a phone call to the customer service phone number on the back of the card. When the customer service representative gets on the phone, tell them you’d like to cancel the card effective immediately.

When the representative confirms the cancelation, request for written confirmation of its closure and ask how long the process will take. The process should be immediate, but you will want to confirm this with the credit card company.

6. Send a certified letter

It’s a good idea to type a letter outlining your request to close your account with all the required details, including your account number, your name and address, and the requested date of cancelation. Send this as a certified letter through the Post Office with confirmation of delivery. This provides you with a paper trail, proving you canceled the credit card on a certain date.

This step is not a requirement, but it is a great way to protect you from charges caused by a representative forgetting to process your cancelation or a glitch in the system.

7. Destroy the canceled credit card

With your account now canceled, you can safely destroy the credit card. Plastic cards are simple to destroy. You can either cut them into small pieces or run them through the paper shredder with a card-shredding function.

If your credit card company issued you one of the fancy metal cards, don’t run it through a shredder or attempt to cut it up. Instead, contact the card issuer and ask if it offers a card-recycling program or has a recommended card-destroying procedure.

8. Confirm the closure on your credit report

With the credit card cancelation process underway, you’ll need to keep an eye on all three major credit bureaus: Experian, Equifax and Transunion. In the coming days or weeks, you should see the account marked as closed on your credit reports.

You can get a yearly free credit report from or keep track of your credit card account using one of the various free credit report websites. 

If a few weeks pass without it being marked closed, contact the credit card company to verify the account is closed.

Stay on top of your credit report after closure

Once your credit card is canceled, you should be in good shape, but you can’t let your guard down. Despite shredding or recycling your credit card, there is still the potential of someone getting the credit card numbers or other information and accessing your sensitive data.

To mitigate this risk, remain vigilant in protecting your credit by keeping a close eye on your credit report and setting up alerts for any changes to your credit. This will ensure there are no hiccups in the process, keeping you in control of your credit.

With credit monitoring and proper credit card disposal, you’ve taken a key step toward managing your credit, but there’s always more to learn. Check out our recent posts on credit card management for more practical tips and how-to guides.