How Do I Dispose of Chip Credit Cards?

Woman with credit card
Photo by Josep Suria / Shutterstock.com

Welcome to the “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.

Today’s question is about credit cards; specifically, how to dispose of the newer versions of credit cards with embedded digital chips.

Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.

You also can learn how to send in a question of your own below.

For more information, check out “The 5 Best Credit Cards This Spring” and “4 Reasons You Should Switch Credit Cards.” You can also go to the search at the top of this page, put in the words “credit cards” and find plenty of information on just about everything relating to this topic.

And if you need anything from a better credit card to a mortgage, be sure and visit our Solutions Center.

Got a question of your own to ask? Scroll down past the transcript.

Don’t want to watch? Here’s what I said in the video

Hello, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by Money Talks News, serving up the best in personal finance news and advice since 1991.

Today’s question comes from Kim:

“What is the safest way to dispose of the new chip credit cards so personal account information isn’t stolen?”

Destroy the card, not the account

Before we talk about how to destroy our physical cards, let’s talk about closing credit accounts.

If the card isn’t charging an annual fee, don’t worry about closing the account. Leaving it open typically won’t hurt your credit score, while closing it could negatively impact your credit score. That’s because of two factors.

Factor one: Part of your credit score comes from the length of your credit history. If you cancel an account you’ve had a long time, you could be reducing the length of your credit history. For example, I’ve had one credit card for 25 years. A long credit history improves my credit score.

Note, however, that when you close an account, it won’t immediately impact your history. Closed accounts in good standing can remain on your credit history for 10 years. But still, if it’s helping, why close it?

Factor two: Another part of your credit score comes from your credit utilization ratio — in other words, how much credit you’re using compared with how much you have. You want that ratio to be low; most experts say below 30%.

For example, if you’ve got a $3,000 balance and have $10,000 of credit available, you’ve used 30% of your available credit — you’re at a 30% utilization ratio. That’s good.

But what happens when you cancel some of your available credit? If you’ve got a $3,000 balance and have only $5,000 of available credit, your credit utilization ratio just went to 60%; now you look like someone about to max out their credit.

Bottom line? If an account isn’t costing you anything, why cancel it? Unless you’re afraid of temptation, just leave it alone and forget about it.

If you do want to cancel the account — say, because it’s costing you money — call the number on the back of the card, ask them how to do it and follow their instructions. If they say you can cancel it over the phone, fine. But take notes of who you talked to, what they said, etc., in case something goes awry.

Destroying the card

In the past, what you’ve probably done to destroy an old credit card is cut it up with scissors. And guess what? That still works.

When it comes to chip cards, the American Bankers Association recommends cutting through the chip, then cutting the card a few more times. Then, dispose of the sections in more than one trash bag.

If the card is metal, you could use tin snips, or pull out your power tools and go to town. Or, you could just request a prepaid envelope from the issuer, send it back and wonder why the heck they make credit cards out of metal in the first place.

If you search this topic online, you’ll find lots of other ideas, including using a magnet on the magnetic strip before slicing and dicing, burning them in a fire, or using a heavy-duty shredder. All good.

But in the end, all you really need to do is cut it up, making sure you cut the embedded chip. Put it in multiple trash cans and you’re done!

Hope that answers your question, Kim. See you all next time!

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would with any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

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.

About me

I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
4 Ways the Social Security System Will Change in 2020
4 Ways the Social Security System Will Change in 2020

These adjustments will impact both workers and retirees in the new year.

10 Products That Will Help You Save Money
10 Products That Will Help You Save Money

Sometimes, spending a little cash right now can save you a lot of money down the road.

10 Food Staples That Are Easy and Cheap to Make Yourself
10 Food Staples That Are Easy and Cheap to Make Yourself

Making any of these key foods yourself will improve meals — and your budget.

7 Surprising Things That Damage Your Credit Score
7 Surprising Things That Damage Your Credit Score

A seemingly small stumble can cause your credit score to plummet.

Beware These 3 Tax Penalties on Retirement Accounts
Beware These 3 Tax Penalties on Retirement Accounts

Protecting a nest egg is tough — but you can make the situation far worse with some boneheaded mistakes.

View this page without ads

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

Get Started

Most Popular
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.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

7 Unusual Ways to Declutter Your Home
7 Unusual Ways to Declutter Your Home

Tired of possessions weighing you down? Here are seven ways to declutter painlessly and effectively.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

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

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

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

Eat This Food If You Want to Avoid Alzheimer’s Disease
Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

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

These practical products make everyday life a little easier.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

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.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

15 Outrageously Overpriced Products — and How to Save on Them
15 Outrageously Overpriced Products — and How to Save on Them

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

Why Half of Retirees Now Owe Taxes on Social Security
Why Half of Retirees Now Owe Taxes on Social Security

Growing numbers of seniors are paying taxes on their Social Security benefits, but you might be able to avoid this fate.

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.