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How to Cancel a Credit Card

Katy mentors and educates young professionals and helps those beginning their careers and financial journeys to make informed decisions.

Credit cards have so many benefits but there usually comes a time when they're no longer needed for whatever reason.

As long as your account is in good standing, it is fairly easy to close a card. The bank doesn't need to know the reason.

How to Close a Credit Card

Ideally, your card should have a zero balance and no pending transactions before you're ready to close. You also want to make sure your card doesn’t have a positive balance (meaning the bank owes you money) and all rewards have been cashed out.

The process for closing any card is always the same:

  1. Bring your balance to zero.
  2. Call or message the bank that you would like to close the account.
  3. Wait for the bank to take action. This can be a fast as immediate or take as long as five business days.
  4. Confirm that your account is actually closed.

The last step is a must for any account closure. If a card remains open that you thought was closed, then fees and interest can stack up over time while it is inactive. Confirm the account is closed before you move on.

Cancel a Chase Credit Card

Chase’s card cancellation process is straightforward. It’s the easiest process I’ve been through with any bank. Secure Message always works for this. It’s a simple but multi-step process:

  1. Send a Secure Message. Include the account number and express that you would like to close the account.
  2. Chases sends you an automated message stating they will reply to you within 24 hours, you can ignore this.
  3. A Chase representative will close your account. They will notify you via Secure Message that the account is closed and give you any necessary information about remaining items such as rewards.
  4. Check your account status online. It will be closed immediately.
Send a secure message to Chase to close a credit card.

Send a secure message to Chase to close a credit card.

Does Cancelling a Credit Card Hurt Your Credit Score?

Closing out any active credit line will always have an impact to your credit score. And it’s almost always negative.

Credit Utilization

Credit utilization is the total credit reported each month divided by the total credit available. This gives lenders a good idea of how much you use credit. Keeping credit utilization under 10% is a good rule of thumb to keep it from impacting your credit score.

For someone with just credit cards, the credit utilization is the total of all balances divided by the total credit limit. Closing a card takes away the card's credit limit from your total. For anyone who regularly uses credit, that means the overall credit utilization will go up. Mitigate this by using less credit or opening a replacement card with a comparable limit.

When Closing an Account Can Actually Help a Credit Score

There is a specific case worth mentioning where closing out a card can actually bump up your score. This would be the case if it’s the newest card you have and it is bringing down the age of accounts. You could see a slight increase in your score by closing an account that was opened very recently compared to the others.

What Happens When You Close a Card?

Let’s discuss what’s actually happening when you close or cancel a card.

Once the lender (like American Express, Chase, Discover, etc) closes the credit account, that means that they cut off your access to a credit line to make purchases.

Canceling a card doesn’t end your relationship with that lender and doesn’t necessarily mean you won’t be able to login to online banking with the same credentials. If you have a checking or savings account or another card with the same lender, those will remain unaffected. If you’re worried about those accounts make sure you’re explicit in any written or verbal communications with the lender that you want to close the card only, not the other accounts.

Unfortunately, closing a credit card doesn’t erase missed payment history or other derogatory marks from showing up on your credit report. It takes seven years for negative history to drop off credit reports.

Good Reasons to Close a Credit Card Account

We know that cancelling a credit card almost always hurts your score. So why would anyone ever bother closing cards?

If you’ve struggled with making payments on time and began carrying balances from month to month, you might be closing out the card to resist the temptation to overspend. That’s a perfectly valid reason. Credit is not for everyone and takes some serious discipline to keep yourself out of trouble.

But remember that closing out a card doesn’t erase a delinquent status. Also keep in mind that having credit history will only help you in the future. If you want a mortgage or car loan in the future, you might consider leaving the card open and either ask for the limit ot be lowered or cut up the card.

A common reason for closing a card is being approved for and opening cards with better rewards and benefits. You might have needed a secured card or others that are easy to qualify for many years ago when starting on your credit journey but you haven’t touched that original card in years. Of course, you’ll still get a ding on your credit when you close out the first card, especially if it’s old. So just be sure to wait until you have other old cards as well that increase the average age of accounts on your report.

Credit card rewards are another reason to cancel an account. For some rewards cards, the account has to be closed for a certain period of time before the sign up offer is valid again. Credit card rewards churners close an account as soon as they reap all the sign-up benefits to start the wait time until they can open up that same card again. Credit factors still apply here but churners should already be well aware of the impact.

Other Factors

There are a number of other factors to think through before cancelling a card besides your credit score and how to do it.

Make sure you understand how any remaining rewards points or cash back will be distributed. It’s a good idea to use those up before calling to cancel.

Also, alert any authorized users that the account is closed. Realize closing this account will probably low their credit score for a period of time.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2018 Katy Medium

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