How to Cancel a Credit Card

1. Pay Off Any Balance

You can close a credit card with a balance, but interest and fees will continue to accrue until it's paid off. Also, since closing the card removes its credit limit from your available credit, your utilization rate will increase because a balance remains.

To avoid extra costs or a credit score dip, it's a good idea to pay off the balance and clear any pending charges before closing the account.

Learn more: What Is the Difference Between Credit Card Balance and Utilization?

2. Redeem or Transfer Rewards

In most cases, closing a credit card means forfeiting any unredeemed rewards. Some credit card companies offer a short grace period, but it's best to redeem your cash back, points or miles before canceling. If your rewards can be transferred to another program, do that first. Also check your most recent statement for pending rewards that haven't yet posted.

An important exception is airline or hotel credit cards. Those typically deposit rewards directly into your loyalty account, so closing the card won't erase them. Just be sure to review the loyalty program's expiration policy, since inactivity could still cause those points or miles to expire.

3. Transfer Recurring Payments to a New Card

If you pay for subscriptions, utilities, insurance premiums or other recurring charges with your current credit card, switch those payments to a new card or another method before canceling.

Once the account is closed, recurring transactions will usually be declined, which could lead to late fees, missed payments or even canceled services. Checking your billing accounts in advance helps ensure nothing slips through the cracks.

Learn more: Can Automatic Bill Payments Help My Credit Score?

4. Contact Your Credit Card Issuer

Once you've confirmed your account is ready to close, contact your credit card issuer to submit your request. You can usually do this by calling the number on the back of your card, sending a secure message through your online account or using live chat.

The representative may ask why you're closing the card or offer incentives, such as bonus rewards or a waived annual fee, to keep it open. If you still want to cancel, politely decline and ask for confirmation that the account has been closed.

5. Destroy Your Old Card

After cancellation, destroy your card to protect your personal information. Shred plastic cards, or if it's a metal card, request a prepaid envelope from your issuer to return it for proper disposal.

6. Check Your Credit Report

Once your issuer confirms the closure, review your credit reports to ensure the account is listed as "closed by cardholder." If it's reported as "closed by issuer," it could raise questions for future lenders.

If you spot an error, you have the right to file a dispute with the credit bureaus or contact your card issuer directly to correct it.

Learn more: Understanding Your Experian Credit Report

Should You Close a Credit Card?

While keeping older credit cards open is usually recommended, there are several situations where closing one could be the smarter move. Consider canceling a card if:

• The annual fee isn't worth it. If the rewards, perks or benefits no longer justify the cost, closing the card may make more sense than paying for something you rarely use.
• You struggle with overspending. If having a credit card tempts you to spend more than you can afford to pay off each month, closing it can help you stick to your budget and avoid unnecessary debt.
• You have duplicate cards. If multiple cards offer similar rewards or benefits, you can streamline your wallet by keeping the most useful one and closing the rest.
• You're upgrading from a secured card. If you used a secured credit card to build or rebuild your credit score, your card issuer may require you to close the account to get your refundable deposit back.

Ultimately, the decision to cancel a card should align with your financial goals. Before you do, explore options like downgrading to a no-fee version or keeping it open with limited use to maintain flexibility.

Will Closing a Credit Card Hurt My Credit Score?

Closing a credit card can affect your credit score in several ways—sometimes negatively, sometimes not at all. The impact depends on your overall credit profile and which account you're closing.

Here's how canceling a card can influence your credit score:

• Reduced available credit: When you close a card, your total available credit decreases, which can raise your credit utilization rate if you carry balances on other cards.
• Shorter average account age: Credit scoring models consider how long you've managed credit. Closing one of your oldest accounts can eventually shorten your credit history and slightly lower your score over time.
• Loss of positive payment history (over time): Closed accounts whose payments are current can remain on your credit report for up to 10 years, but they'll eventually drop off, potentially reducing your score if that account helped demonstrate responsible use.

Simply closing a card doesn't automatically lower your score. The effect comes from the resulting changes to your credit utilization and account age.

Alternatives to Closing a Credit Card

If you're thinking about canceling a credit card, it's worth considering a few alternatives first. These options can help you avoid hurting your credit score while still addressing the reason you wanted to close the account:

• Downgrade to a no-fee card. If the annual fee is the issue, ask your issuer about switching to a no-annual-fee version of your card. You'll keep your credit history and limit intact while avoiding the fee, but you may sacrifice some rewards and perks.
• Request a lower credit limit. If you're worried about overspending, ask your card issuer to reduce your limit instead of canceling. It can help you manage temptation while preserving your available credit.
• Store the card safely. If you don't trust yourself to use it responsibly, put the card somewhere out of reach, like a locked drawer or safe, but keep the account open to maintain your credit history.
• Set the card to autopay small bills. Keeping the card active with minimal use (like a recurring subscription) prevents account closure due to inactivity and helps maintain your credit utilization rate.
• Ask about retention offers. Before canceling, contact your card issuer to see if they'll offer a statement credit, waived fee or bonus rewards to keep your account open.

These alternatives allow you to manage your finances strategically without losing the long-term credit benefits of keeping your account open.

The Bottom Line

Closing a credit card can be a smart move in the right circumstances, especially if it helps you avoid unnecessary fees or overspending. But it's a decision that deserves careful planning.

Once you've closed your account, it's essential to keep an eye on your credit report to ensure everything is reported accurately. With Experian's free credit monitoring service, you can track changes to your credit report, spot potential errors and see how your decisions affect your score over time. Staying informed is one of the best ways to protect your financial health and make smarter credit moves in the future.