Make These Essential Moves Before Canceling a Credit Card

by Maurie Backman | Published on Sept. 18, 2021

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Someone cuts up a credit or debit card with scissors in their home.

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Don't get rid of a credit card before checking off these key boxes.

There may come a point when you decide you're ready to cancel a credit card. Maybe you don't love the customer service, or you've found a different card that does a better job of serving your needs. In some cases, canceling a credit card you don't think you'll get much use out of does make sense. But before you go that route, here are a few important moves to make.

1. See how long the card has been open

Canceling a credit card you haven't had open for very long isn't a big deal. But canceling a credit card you've had for 10 years is a different story.

One key factor that goes into calculating your credit score is the length of your credit history. Keeping long-standing credit card accounts open is actually good for your score, so before you cancel a card, see how long you've had it in your name. And consider keeping it around if it might help keep your credit score intact.

2. See if the card charges an annual fee

If you have a credit card that's not working for you and it comes with an expensive annual fee, then canceling it could make a lot of sense, even if that card has been open for a while. But if there's no fee at hand and you've had it for a while, then you might as well keep that card.

And even if you haven't had that card open all that long, it still adds to the total spending limit across all of your credit cards. The higher your spending limit, the more it can help your credit score by keeping your credit utilization ratio within favorable territory. That ratio measures your credit card balances relative to your total line of credit, and keeping that not-so-great card open means retaining the spending limit it gives you. (Plus, it never hurts to have that card around in case of an emergency.)

3. If there is a fee, see if it's negotiable

You never know when a credit card issuer may be willing to come down on its fee or waive it, either permanently or for a period of time. Before you close a credit card, it's worth having that conversation and seeing what your options are.

4. Make sure you've redeemed all of your reward points

You may decide that one of your credit cards just isn't worth keeping around. But before you close your account, make sure to redeem any reward points or cash back you're entitled to. In fact, don't just redeem those perks -- wait to make sure you receive your reward item in hand or see your cash back hit your bank account before canceling your card.

In some cases, canceling a credit card won't really impact you. But in other cases, there can be consequences to closing a credit card account. Before you make that move, check these key items off your list. That way, canceling your card won't damage your credit or cause you to lose out on any financial rewards you're entitled to.

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