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The Best Way to Cancel a Credit Card

by Marissa Willman

Overview

If you own credit cards that are rarely used or that have unfavorable account terms, you may wish to close the accounts. Extra credit cards may entice you to spend more when the option is available. Also, a large amount of available credit may be seen as possible future debt by potential lenders. You may also want to close an account that charges an annual fee or has high interest rates. Whatever your reason is, it is important to protect your credit score when canceling a credit card.

You can cancel unnecessary credit cards to limit potential debt.
Considerations

Choose which credit cards to cancel by considering their interest rates, annual fees and age. Accounts that have been open longer reflect positively on your credit rating, while closing a newly opened account can negatively impact your average account length. Also, cards with higher interest rates are more expensive to use because of the finance terms. If you have other credit cards with lower rates, you may want to close the account with a higher rate. Finally, if you are not using a card that has an annual fee, consider closing the account. Otherwise, you are paying to keep an account open while you are not utilizing the credit.

Balances

Before you cancel your credit card, you will want to pay off any outstanding balances or transfer the balance to another card. Avoid using the card and incurring additional charges, as this will prolong the process of canceling the card. While you may be able to suspend your account while it still holds a balance, your account will not be officially closed until the balance is paid. Leave the account open while you are paying off the balance. This will increase the length of time the account is open and paid on time, which will help your credit rating.
Communications

Once your account reflects a zero balance, call your credit card company to notify them that you would like to close the account. The contact number can be found on the back of your card or on your monthly statement. Wait until the balance is paid in full to avoid having the company increase your interest rate while you pay off your balance. Some companies have customer service representatives who specialize in retaining customers who wish to close their accounts. If your credit card company tries to persuade you to keep the account open with lower interest rates or other perks, continue to insist on closing the account. Ask for the name and title of someone to whom you can send a formal, written request. After you make your cancellation request by phone, send a written request to cancel your account to the credit card company through certified mail. This will give you proof that the notice was received in case there are any disputes in the future.
Follow-Up

Check your credit report to ensure your account was closed properly. Your credit report should state that you, not the credit card company, requested to close the account. Your report should also reflect the date the account was closed and a zero balance, if you paid the account off in full. If any of the information is incorrect, contact your credit card company to resolve the matter. The company will need to resubmit information to credit reporting agencies.