Ask Stacy: How Do I Cancel a Credit Card?

Photo (cc) by grafixtek

This week’s question is short, but if you use credit cards, important.

Hello, Stacy. Would you discuss the procedure for canceling a credit card? Thanks. — Judy

Like breaking up with a boyfriend or girlfriend, there’s a right way and a wrong way to split up with your credit card company. I’ll give you the steps, but first, consider this question:

Are you sure you want to do this?

When you cancel your account, it could negatively impact your credit scores in two ways:

  • If you have balances outstanding on other cards, it could raise your credit utilization ratio, which could hurt your credit scores. For example, say you have two cards, each with a $5,000 limit. One card has a $5,000 balance, and the other, the one you’re canceling, has a zero balance. Since you have $10,000 of credit available and $5,000 outstanding, your credit utilization ratio is 50 percent. You’ve used half of your available credit. Canceling a card means you’re using all of your available credit: 100 percent. That could lower your credit scores.
  • Part of your credit scores is based on the length of your credit history. Having a bunch of old accounts is better than a bunch of new ones.

Important: Neither of these things is critical. If it’s time to break up with your card company, do it. But if you’re about to apply for an important loan, like a mortgage, you might want to wait until you’re approved for that loan just to be sure.

Got your mind made up? Let’s get to it.

Step 1: Pay it off

While you can close an account to new charges, even though there’s a balance, to completely close it, you should pay it off. So if it’s time to say goodbye, it’s time to zero that balance.

Got any automatic payments hitting the card? Move them.

Once the balance is zero, don’t use the card. Wait a week or two, then check your account online and make sure no charges show up.

Step 2: Break the news — twice

Balance paid? It’s breakup time.

Call the customer service number on the back of your card or on your monthly statement. When you get a customer service rep, confirm you have a zero balance. Then tell the rep you’re canceling your account. If for some reason you don’t have a zero balance, don’t cancel.

Just as you’d do if you were leaving your lover, it’s best not to let the issuer know you’re on the way out until you’re ready to make your move.

While you’re on the phone, ask the rep for a name and address where you can send a letter to make it official. When you hang up, write a short letter to that name and address. It doesn’t have to be fancy. Just include your name, address and account number. Say you’re canceling your account and want your credit history to reflect you requested that the account be closed.

Use certified mail and request a return receipt so you can prove the company received your letter.

Step 3: Follow up

Let a full 30 days go by, then go to AnnualCreditReport.com and pull a copy of one of your credit reports. The account should show “closed by customer.” It shouldn’t say “closed by creditor.” If it does, don’t contact the credit reporting agency — it’s not their problem. Instead, get back on the phone with the credit card company’s customer service, then follow up with another certified letter to your card company explaining the problem. Include a copy of your original letter as proof of their mistake.

Wait another month, then check again.

Too much hassle? Don’t worry about it

If you’re longing for a new lover, you’re probably better off losing your old one first. But when it comes to credit accounts, you can have as many as you’d like.

It doesn’t really hurt to leave old credit lines open, as long as you don’t have too many (more than five credit cards), are not being charged an annual fee and won’t be tempted to overspend.

In short, unless there’s a reason to close an account, you could just stop using it. If you’re ever notified that your account will be closed for inactivity, and it’s one you want to keep, make a small purchase, pay it off, then place the card back in plastic purgatory.

Got a money-related question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter. If you’re not subscribed, fix that right now by clicking here.

The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

Got any words of wisdom you can offer for this week’s question? Share your knowledge and experiences on our Facebook page.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
15 of the Fastest-Growing Jobs Today
15 of the Fastest-Growing Jobs Today

Times are tough, but these career fields are thriving.

Why Is My Pension Killing My Social Security Benefit?
Why Is My Pension Killing My Social Security Benefit?

A reader says the government is penalizing him for having a pension. Is he right?

The Worst Nursing Homes in America Are Revealed
The Worst Nursing Homes in America Are Revealed

The nursing homes with a history of providing subpar care previously hadn’t been identified for a government list.

The 5 Most Expensive U.S. States for Retirees
The 5 Most Expensive U.S. States for Retirees

If you have or expect to have a modest retirement income, you may want to avoid spending your golden years here.

Never Buy These 12 Things at a Thrift Store
Never Buy These 12 Things at a Thrift Store

Sometimes a great deal is not worth it — or, even worse, is dangerous.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.