Canceling a credit card can be an important decision for your financial health. Whether for security reasons, to avoid annual fees, or simply to reduce the number of cards in use, understanding the process is essential. 

Follow our text to learn how to cancel a credit card correctly.

Does Canceling a Card Affect Your Credit Score?

A man learning How to Cancel a Credit Card.

Canceling a credit card can indeed affect your credit score, and it’s important to understand how this happens to make an informed decision. 

One of the factors that make up your credit score is the length of credit usage. 

If the card you’re canceling is one of your oldest, its cancellation may reduce the average age of your credit accounts, negatively impacting your score. 

Credit utilization rate is one of the most important factors for your credit score. The utilization rate is calculated by dividing the total credit used by the total available limit. 

When you cancel a credit card, your total credit limit decreases, which can increase your utilization rate if you have balances on other cards. 

Additionally, maintaining a variety of credit types, such as credit cards, personal loans, mortgages, etc., can benefit your score. 

Canceling a card may reduce this diversity, negatively impacting your score, especially if you don’t have many other forms of credit. 

However, there are times when it’s necessary to know how to cancel a credit card, especially if it will no longer be useful to you.

Steps to Cancel a Credit Card

Canceling a credit card involves some essential steps to ensure that the process is completed smoothly.

Pay the Remaining Balance

Before requesting the cancellation of your credit card, it’s essential to pay off any outstanding balance. 

This includes not only your purchases but also any accrued interest or fees. By maintaining a balance, the card issuer will not allow cancellation until all amounts are paid. 

To avoid complications, check the latest card statement to determine the exact amount that needs to be paid. Make full payment of the outstanding balance. 

Ensure that the payment is processed before moving on to the next step. After making the payment, wait a few days and check the balance again to ensure it is truly zeroed out. 

This ensures that your balance will be zeroed out before canceling the credit card.

Redeem Your Rewards

If your credit card offers a rewards program, such as points, miles, or cashback, it’s important to redeem these benefits before canceling the card. 

Often, when canceling the card, you may lose the right to these accumulated rewards. 

Access your online account or contact customer service to find out how many points or miles you have available. 

Use the points or miles according to the options offered by the rewards program. This may include exchanging for products, discounts on purchases, airline tickets, or even credit on the bill. 

After requesting the redemption, verify that the rewards have been correctly applied or received. Keep any related confirmation or receipt for this transaction. 

Following these steps ensures that you maximize the benefits of your credit card before closing it and avoids any unpleasant surprises, such as remaining balances or unredeemed rewards.

Contact the Issuing Company

After paying the remaining balance and redeeming your rewards, the next step is to contact the credit card issuer to request cancellation. 

This contact is essential to formally initiate the cancellation process. Follow these steps: Have your credit card number and any other identification information the company may request on hand. 

Use the phone number available on the back of the card or on the company’s website. 

Inform the representative that you want to cancel the credit card. Ask the representative to send a confirmation by email or letter indicating that the card has been canceled. 

This serves as evidence in case of any future disputes. Record the date, time, and name of the representative you spoke with. These details may be useful for future reference.

Send an Email or Letter to the Issuer

In addition to calling the company, it’s advisable to formalize the cancellation request in writing. 

Sending an email or letter formalizes your request and creates a documented record of your request. 

Write a clear and direct email or letter. Include all your personal information, the reason for cancellation, and evidence that there is no outstanding balance. 

If opting for email, send it to the company’s customer service address. If you prefer to send a letter, use the physical address of the customer service center or the company’s main office. 

Keep a copy of the email sent or the letter posted, along with any receipt or confirmation of delivery. 

This serves as additional proof of your cancellation request. By following these steps, you ensure that the credit card cancellation request is properly formalized and documented, minimizing the risk of future complications.

Check Your Credit Reports

After canceling your credit card, it’s essential to check your credit reports to ensure that the cancellation was processed correctly and that there are no errors or outdated information that could affect your credit score. 

Wait a few weeks after canceling the card for the information to be updated on the credit reports. 

Review the information: Check if the canceled credit card appears as “closed” or “canceled” on the report. 

Make sure there are no outstanding balances or unrecognized transactions. If you find any errors, contact the credit bureau and the card issuer to correct the information. 

This may involve submitting documentation proving the cancellation and payment of the balance.

Cut Up Your Card

After confirming that the cancellation has been processed correctly and that there are no outstanding issues, the next step is to ensure that the card cannot be used again. 

To do this, you must physically destroy the card. Cut the card into small pieces. Use sturdy scissors to cut the card into several pieces. 

Make sure to cut through the chip and magnetic stripe so that the card cannot be reused or read. 

Distribute the pieces of the cut card into different trash bags to increase security and ensure that no one can reconstruct the card from the pieces. 

If you have a virtual credit card linked to your physical card, it’s essential to cancel and remove it from any devices or apps where it’s registered. 

By checking your credit reports and physically destroying the credit card, you complete the cancellation process safely and effectively, protecting yourself against potential fraud and ensuring the accuracy of the information in your credit history. 

Follow these steps on how to cancel a credit card and be sure to have the product canceled without any problems. See other financial tips on our website.