Cancelling a credit card can be a stressful experience - especially if you are unsure if this will hurt your credit score. Having gone through this practice over 45 times and counting, without a missed payment to date or negative impact to my credit score, the below steps are my guide to a frictionless, pain-free experience that you can replicate multiple times per year.
And, if you are wondering why you would need to cancel so many credit cards, I highly recommend our getting started guide for frequent flyer points. This is a great starter kit for those interested in travel hacking, and there is ample evidence that applying for dozens of credit cards does not hurt your credit score long-term. Both articles are well worth a read.
The Steps To Cancel
For the cancellation itself, here are five easy steps to follow:
- Step 1: Pay off your balance. This is typically done one to two months prior to closing the card, but can also be done a few business days prior to closure - if you're in a pinch. Always have a zero dollar balance when you close the account, and ideally make sure no future, recurring payments or pending refunds are scheduled. Either of these could cause stress down the line for you.
- Step 2: Think ahead. Perhaps the easiest way to build credit is to accumulate higher and higher credit lines; the reason being this drives down your percentage of debt you actually utilize. So, before you close, walk through a few mental questions. Is there a no-fee version of the credit card you can downgrade to for free - and, thus, keep the credit history? Or, alternatively, is there another card at the same bank you’ve been eyeing? If the latter is true, apply for the new credit card first, using your "old" card as a bargaining chip. Many banks like existing customers, so keeping the credit card open pre-application may improve your chances of an approval.
- Step 3: Login to your bank's online portal and find the "secure message" section. Usually, this is found in the "Help" section of the website, and may be in the form of a chat box. Electronic submission is usually preferred to phone, as you do not have to deal with as strong of a sales pitch of alternative products. If you're having trouble finding this section, try calling your bank's phone number via this informative database.
- Step 4: Tell the agent, truthfully, why you are canceling the card. My reason is almost always the same: the card is not worth the annual fees to me - which is true. I am constantly applying to new credit cards, so the card to be canceled is almost always valueless to me. You are under no obligation to keep the card, so stand your ground in the face of pushback - unless they offer a generous retention bonus in the form of waived fees or free points.
- Step 5: Make sure the account is closed. While banks complete your request 99% of the time, I have still read stories - whether true or not - of customers accounts remaining open until an old fee is overdue. This could have serious ramifications to your credit score, so it is always better to check. I do so by logging into the bank account one or two months after closure, to make sure the balance is still zero and the card shows as closed.
Now a couple important reminders: if the card you are thinking about canceling is your oldest card or has a particularly large credit line, it may be worth keeping (or at least downgrading to a no-fee version) to preserve your credit score.
If you are worried about how a card may or may not affect your credit score, I recommend reading our blog post on the subject to better understand this important financial figure. CreditKarma also has a great calculator that predicts what the impact would be for canceling a certain card. While not perfectly accurate, it is a good general gauge before you make your final decision.