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How to Close a Credit Card Account: A Step-by-Step Guide

At O1ne Mortgage, we prioritize your financial well-being and aim to provide you with the best advice for managing your credit. If you’re considering closing a credit card account, it’s crucial to ensure the process is handled correctly. Here are some steps to help you navigate the process smoothly and effectively.

Should You Close a Credit Card?

Closing a credit card might be the right decision if you’ve struggled with overspending or if the card’s annual fee outweighs its benefits. However, it’s important to note that closing a credit card can negatively impact your credit score, especially if it’s your oldest account. The loss of available credit can increase your credit utilization rate, and while the account history will remain on your credit report for up to 10 years, closing it will stop positive contributions to your credit score.

Weigh the pros and cons carefully before making a decision.

1. Pay Off Any Balance

While you can technically close a credit card with a balance, interest and fees may still accrue until the balance is paid off. Additionally, your credit utilization rate may spike. It’s advisable to pay off your balance and check for any pending transactions before contacting your card issuer.

2. Redeem or Transfer Rewards

Canceling a credit card often results in forfeiting unredeemed rewards. Some companies may offer a grace period, but it’s generally better to redeem all your cash back, points, or miles—or transfer them to another rewards program—before closing your account. Check for pending rewards from your most recent statement cycle as well.

3. Transfer Recurring Payments to a New Card

If you have recurring payments set up on your current card, switch them to a new credit card or another payment method. Once your account is closed, new recurring payments will typically be declined, which could result in late fees or canceled services.

4. Contact Your Credit Card Issuer

Once your account is ready for cancellation, reach out to your credit card issuer to submit your request. Depending on the issuer, you may be able to do this over the phone, through a secure message in your online account, or via live chat. You may be asked to provide a reason for the cancellation, and the issuer might offer an incentive to keep the account open. If you wish to proceed, politely decline the offer and ask for confirmation of the cancellation.

5. Destroy Your Old Card

To ensure no one gains access to your card or personal information, shred your credit card after it’s been canceled. If the card is made of metal, ask the issuer to send an envelope for you to return the card for destruction.

6. Check Your Credit Report

Even after receiving confirmation from the issuer, monitor your credit report to ensure the account is marked as closed. Make sure it is marked as closed by the cardholder, not by the issuer, to avoid any negative impressions on future creditors. If the information is inaccurate, you have the right to file a dispute with the credit bureaus or contact the credit card company directly.

The Bottom Line

Closing a credit card account can impact your credit score, but it may be the right move for your financial health. Consider all your options carefully and follow these steps to ensure a smooth process. For any mortgage-related needs, feel free to call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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