So, you decided to cancel a credit card. It may be so easy to cancel it right away, but there are a few ways on how to cancel a credit card without hurting your credit score. There are different reasons why you might want to cancel a credit card. It might be that you no longer use the card, or maybe you have a travel card, but your schedule has changed. Perhaps it’s a card that you pay with an annual fee you don’t even use.
In this article, we’re about to tell you how to cancel a credit card, the smart and credit-score-friendly way. We’re also here to help you answer the question: do I really need to cancel my credit card?
First things first: Do you really need to cancel a credit card?
It may be very easy to end your credit card contract right away, but there may be consequences to consider. Before cutting it all off, consider the following things first.
1. Cancelling a Credit Card Might Affect your Everyday Life
If you’re used to swiping your card for common expenses, canceling it might have implications. This is will be a problem, especially if you have only one credit card.
For example, if you use your credit card to pay for day-to-day expenses at grocery stores, restaurants and gas stations, you'll have to find a new method of payment. If the card you used previously at those locations earned rewards, you might also be losing out on similar benefits moving forward. If you plan to use another card, look into its features and see if it's an equally good option.
You might have already decided you prefer to pay with a debit card, check or cash. Every payment method has its own specific uses and issues that you might want to weigh out before canceling a credit card.
2. Consider the Impact on Your Credit Score
For a quick recap, five major factors that influence your credit scores: payment history, amounts owed, length of credit history, new credit, and credit mix. Canceling a credit card could affect each of these factors and yes, your credit score.
How to Cancel a Credit Card in 7 Steps Without Hurting Your Credit Score
Closing an account the right way takes a little time, patience, and organization. The most important step is to ask your credit card issuer on how to do it the right way.
As you go through the process of canceling your credit card, you may want to keep thorough notes on whom you spoke to, what they said and when. If anything goes wrong, you will have all the facts recorded.
Now that you finally decided to cancel your credit card, here are the ways on how you can do it.
1. Contact The Customer Service of the Credit Card Issuer
Firstly, list down the customer service number or e-mail address of the credit card issuer. The customer service number is usually found on your credit card, monthly statement, and the issuer's website.
2. Redeem Remaining Rewards
For rewards cards, there may be unclaimed points you need to look out for. Check the remaining rewards balance and learn how to redeem it. You can find it on your online account or the issuer’s website. Again, this is where the customer service details come in handy.
In the event that you are unable to claim the rewards, ask the issuer if you can get a statement rebate using the points. Cash back credit cards generally have the easiest redemption features. However, most of them require rewards to reach certain thresholds, usually – $20 or $25 – before you can redeem for a statement credit.
There are cash-back programs that only award accrued cash only once a year, on a predetermined schedule.
Knowing how to claim rewards is important for you to plan out the next steps in officially canceling your credit card.
3. Pay off any remaining balance
This is one of the most important steps in canceling out a credit card. Pay off your credit card in full or, if you can find a balance transfer card with better terms, transfer the balance. You can't completely close a card until the balance is paid.
If you don't want any more charges accrued to the card until the balance is paid, you can contact the issuer and ask that the card be frozen until the balance is cleared and the card closed.
If you normally carry a balance from one month to another, you will need to pay the full statement balance two months in a row to wipe out the balance and stop further interest charges from accruing.
4. Confirm the Balance Reaches Zero
Once you reach the bank's customer service representative, confirm that the balance on your credit card is zero. Rule of thumb: Do not assume that the balance is zero because you paid the total amount on your most recent bill.
Interest may have continued to accumulate between the time the issuer sent the bill and your payment was made. The “leftover” amount is called residual interest. Once you're certain the balance is zero, inform them that you are canceling the card. While some credit card companies will allow you to cancel without even speaking to a representative, others may be less obliging.
If you are met with resistance, hold your horses. As a customer, it is your right to close the account. Tell the representative from the card issuer that you want the account closed at your request.
Ask for a name and address you can write to with a notice of your card cancellation and note this along with the call details, including date, time and a way to identify the representative you spoke to.
5. Send a Letter or E-mail Requesting Card Account Closure
Just in case the customer service rep makes a mistake, write a short cancellation letter, an e-mail, or both to the card issuer. For verified paperwork, request written confirmation of the account's closure.
The letter or e-mail should include the following:
- Your complete name, address, phone number
- Account number
- Additional details from the phone call with the rep
Also, state that you want your credit report to reflect that the account was “closed at the consumer's request.” Along with the letter, include the check number (or a copy of the canceled check or other payment verification) that you used to pay off your account balance.
It is important to make a copy of the letter for your records, you might need this just in case there are errors in your credit reports.
Send the letter via certified mail or with return receipt requested, so you can prove the company received your letter.
6. Check your Credit Report to Confirm the Cancellation
The waiting game is on and this is where you sit tight. Getting the card canceled may take a month or even more. After that time, take a look at a copy of your credit report to make sure the account is marked as “closed.”
Remember: You can pull a free copy of your credit report once a year from each of the top three credit bureaus (Equifax, Experian and TransUnion) at AnnualCreditReport.com. You can also get a free credit score and report If the account appears open, repeat process above. Call the customer service number to report the mistake, follow up with a letter by certified mail (including a copy of your original letter requesting that the account be closed) and then check your credit report again.
7. Dispose Credit Card Properly After Confirming Cancellation
After going through all the processes and confirming the cancellation, you are finally free to discard your credit card.
There are numerous ways of destroying plastic or metal, pick a disposal method that leaves your information completely unrecoverable from identity thieves.
Whatever your disposing method is, make sure that the important details are destroyed completely. This includes your card number, CVV, expiration date, and signature.
Make sure you are ready to cancel out your credit card without affecting your everyday life. Canceling out a credit card might not be easy, and it would take a long time. It sure needs patience and proper planning to be able to do it successfully.