How to Cancel a Credit Card

Credit cards can be useful tools, but once those tools have stopped being useful, it may make sense to let them go. If you want to cancel a credit card, there are a couple of key steps you may want to take to make the process as smooth as possible.

Let’s walk through the steps of canceling a credit card, good reasons to cancel one and how doing so may affect your credit.

Reasons to cancel a credit card

You might cancel a card for several reasons, such as:

• No longer wanting to pay an annual fee: You might decide the annual fee outweighs the card’s benefits, in which case that card may not make sense for you anymore.
• Finding a card that better suits your lifestyle: Different benefits might better fit your spending habits. For example, it might make more sense for you to have an airline credit card if you fly often.
• Wanting to simplify your finances: You might simply want to reduce the number of credit accounts you manage.

How to cancel your credit card

Before you cancel your card, be sure to:

• Pay off your balance (and watch for pending transactions you may need to pay off before closing the account).
• Check your transaction history for recurring charges, such as utilities and subscriptions, and switch those to a new payment method.
• Check the terms of your card’s rewards program and find out how closing the account can affect your rewards. To avoid losing them, you may have to use (or, if possible, transfer) your points, miles or cash back before closing the account.

You can typically cancel your card by contacting the credit card issuer by phone or through your online account and asking to close your account. Afterward, it’s a good idea to dispose of your physical credit cards by cutting them up or shredding them. (Or you may send the card back if it’s a metal credit card — ask your card issuer for details.)

How canceling a credit card can affect your credit

Closing a credit card can impact your credit score. For example, it can affect your:

• Credit utilization ratio: This is the percentage of your available credit that you’re using. Canceling a credit card reduces your total available credit, which can increase your credit utilization ratio if you carry any other balances.
• Credit mix: Your credit mix is the different types of credit accounts you have, such as revolving and installment credit. Canceling a credit card could affect your credit mix, depending on the other types of credit accounts you have.
• Length of credit history: Depending on how long you’ve had the card, canceling it may shorten your length of credit history.

All that said, if you close your credit card account when it’s in good standing, meaning you’ve paid off the balance and made your payments on time, that positive payment history will stay on your credit report for 10 years. That can help your credit.

Alternatives to canceling a credit card

If you’re hesitant to close your card due to potential drawbacks, you might consider alternative strategies.

For example, you may reduce your use of the card while keeping it open. This can make sense if the card doesn’t come with an annual fee, particularly if it’s an older card and you want to maintain the average age of your accounts. You may consider using it for a small, recurring bill to avoid having the issuer close it due to inactivity.

Or, if the card no longer suits your needs, you can ask the card issuer to swap it to a different type of credit card that works better with your spending habits. For instance, you might be able to switch to a lower-tier card that may not have an annual fee, which could help avoid negative credit score effects.

Closing a credit card can be the right call if it leads you to a better financial situation, but it can be worth looking into alternatives, too. If you do close your account, you may want to consider getting a new credit card that more closely aligns with your needs.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.