What’s the Safest Way to Close a Credit Card Account (Without it Hurting My Credit)?

Credit card accounts don’t go away on their own, but you should make a few consideration before chopping up a bunch of credit cards with scissors.

Why Cancel a Credit Card Account?

There are many good reasons for closing a credit card:

• An open credit card account that you don’t use is at risk for identity theft
• You may wish to close a credit card account so you are not tempted to use it and get in more debt
• Annual fees or expired promotions make it unfeasible or costly to keep it open
• You want to close a card with a high interest rate and open a new one with a lower rate

When You Should Keep A Credit Card Account Open

It’s not always wise to close a credit card account, and it has to do with your credit score. Your “credit utilization rate” is one factor the credit bureaus use to determine your score, and when you cancel a credit card account you are reducing your available credit. If you are carrying debt, then your utilization rate will go up because your current debt will be a larger percentage of your overall credit limit. A utilization rate above 10% will start to have a negative impact on your score.

It’s also a good idea to keep certain accounts open for a long time, since it shows that you have a long credit history, which can improve your score.  If you’ve had a credit card account for many years, it might be a good idea to keep it open.

How to Close a Credit Card Account Safely Without Dinging Your Credit Score

From our friends over at Credit Infocenter, here are the steps for closing a credit card account that will give you the best results:

1. Get a copy of your credit report and credit score
2. Pay off the credit card you wish to close so it has a balance of zero
3. If possible, pay off all your other debts (to make sure your utilization rate isn’t affected)
4. Contact the credit card company by phone or online to make sure you have a zero balance and to ask to have the account closed
5. Mail a written “cancellation letter” requesting that your account be closed
6. You should receive written confirmation from the credit card company that your account is closed; keep the confirmation for your records
7. After a few weeks, request your credit report and credit score again. Compare it to your old report and score checking for errors.

It’s only after receiving written confirmation from the credit card company and checking your credit report for additional assurance that you can be 100% sure that the account is closed and it’s no longer being claimed on your report.

Improving your score and keeping it in good shape can take years of effort, but it’s well worth it.

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