How to Cancel a Credit Card without Hurting the Credit Score?

If you want to reject your credit card for any reason.  You are going to call the card issuer for the cancellation of your credit card. So u think that it is a very simple process. Right?? But, you know when you cancel your credit card it will directly affect your credit score?

That’s right.

Experts always suggest that don’t cancel your credit card even if u don’t use it. Because the cancellation of your credit card harms your credit score.

But then, some reasons may force you to close your credit card indefinitely so, how to Get Rid of a credit card without hurting your credit?

For example, you are having a hard time controlling your spending, it is better to close your card even if you are not using it. Similarly, if the value of your card is diminished and you are not using it so it is better to close your card.

One positive plus point is that you can cancel your credit card without hurting your credit score. Here are some steps to cancel a credit card without hurting the credit score.

From this article, we are going to discuss the Safe way to cancel a credit card without hurting your credit score.

Must Read: How to cancel an American Express credit card?

How the cancellation of a Credit Card affect Your Credit Score?

Canceling a credit card affects your credit score. However, we can call it as your credit score will be affected will depend on various factors such as:

  • The length of your credit history.
  • Your current credit limit.
  • The available credit on your card.
  • How much you charge the card.
  • For how long you’ve had the credit card.

Your credit utilization ratio is raised when you cancel your credit card. At the same time, lowers the average age of your account.

The credit utilization ratio is typically the ratio between the total amount of credit in use and the total amount available. For some time, you have a credit limit of $2000 and you save $500 in a month then the credit utilization ratio on the card is 25 percent

($500/$2000 by 100%).

If you have multiple credit cards then your credit utilization ratio also matters a lot. For example, consider you have two credit cards having different limits, the first card has a $3000 limit, and the second has a $1000 limit. If you close your credit card with a limit of $3000 then it will bring down your total credit limit, which will directly harm your credit score.

Probably, credit card companies prefer a credit utilization ratio of at least 30% and below. In simple words, it’s better to have a minimum credit utilization score. On the other case, if you have a large credit utilization ratio, your creditors will automatically assume that you’ll need a high amount of credit to sustain your expenditures and that you might end up defaulting.

So automatically, you will reduce available credit as you close your card. In this way, you can increase your credit utilization ratio.

Till now hopefully, how canceling your credit card can affect your credit score.

Undoubtedly, the factors determining how closing your credit card will affect your score varies from individual to individual.

In short, follow the following steps to cancel your credit card in the right way that means without hurting your credit score.

Cancel Your Credit Card Without Damaging Your Credit ScoreCancel Your Credit Card Without Damaging Your Credit Score

Till now, you understand the major advantages and disadvantages of credit card cancellation. If you still want to cancel your card but not sure how to go about it, don’t panic. We are going to help you. Here are the steps to close your credit card and not to hurt your credit score;

1. Payoff Any Remaining Debt

You are not able to fully close your credit card until the balance is fully paid. You need to keep one thing in mind that interest and fees will continue to accrue as long as the balance remains unpaid. The only solution is to pay the full balance.

Be connected with your credit card issuer for your payoff amount. Your card balance is not the only money you owe. The payoff amount also includes the interest and fees for the entire period you have used your credit card.

If you are not able to pay the payoff balance in a single transaction then you can owe your balance transfer card and transfer the existing balance on your card.

2. Redeem Any Awards on the Credit Card

If you won some points, rewards, and cash back’s then u have to utilize it before closing your card. Otherwise, you will lose your rewards, points, and cashback.

Here are some exceptions with co-branded travel cards. You won’t lose your rewards even if you decided to close your card because rewards are usually transferred from the credit card to their loyalty program every single month.

But keep in connection with the card issuer for more details and the loyalty program.

3. Update Any Automatic Payments

You must have to cancel all the payments on a card or use the other card and link payments to your checking account if you used your credit cards for automatic payments before closing the card.

4. Notify Any Authorized Users About the Card Cancellation

If you have any authorized credit card users be ready to tell them you are canceling the account. So that, this will help them to use a card in the right way after you paid off the balance and are about to have it closed.

5. Confirm that You Have No Balance on the Credit Card

When you made a final payment to your card then it will automatically be considered as your card has zero balance. You might end up being surprised. By calling your card issuer make sure that the card has zero balance.

6. Get In Touch with Your Card Issuer for Card Closure

After the confirmation of the remaining balance is zero then you can request your card issuer to close the card.

The card issuer will confirm the closure of the card.

7. Check Your Credit Report to Confirm the Cancellation

Sometimes, the card cancellation process takes more time, a month or a year. It totally depends on the card issuer.

After the process of cancellation, check the credit report to check whether cancellation has been taken place or not. You can always get this report either from one of the top three credit bureaus namely Transunion, Equifax, and Experian.

8. Dispose of the Credit Card

After the confirmation of the card has been closed you can be disposed of it. Don’t throw it anywhere, cut it up with a pair of scissors or place it in the shredder.

Bottom Line

Canceling your credit card may seem like an easy process. But it is important to understand how it will impact the credit score.

The good thing is that you can close your credit card without hurting your credit score. Follow the above process and just feel relaxed. Hope u got your answer for how to cancel a credit card smart way.

Related Post: How to cancel a milestone credit card.

Leave a Comment