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How to Close Your Credit Card Without Affecting Your Credit Score

Credit cards have become a widely accepted payment method, thus becoming an essential aspect of our lives. They offer financial freedom, ease, and rewards and bonuses that otherwise would be unavailable. Still, there could come a point when you need to cancel your credit card for different reasons. It’s normal to question why cancelling credit cards affects your credit score, specifically because trustworthiness is essential in financial affairs.

What’s the Connection Between Cancelling a Credit Card and Your Credit Score?

Closing a credit card may result in both advantageous and negative consequences for your credit score, depending on the circumstances.

  • Despite highly regarded suggestions, closing a credit card account is sometimes essential.
  • Cancelling a credit card does not negatively impact your credit score.
  • To protect your score on the credit report, pay off all credit card amounts first.
  • However, failing to pay off your credit card debts before closing may harm your credit score by raising your credit utilization.

Credit Utilization Ratio

The credit utilisation ratio, or the percentage of credit you have that you’re using right now, is an important aspect that determines your credit score. By deactivating a credit card you use, you decrease your overall available credit, which is the total amount of many credit card limits. This may boost your credit utilisation ratio when you have outstanding balances on different credit cards. A higher credit utilisation ratio can lower your overall credit score.

Credit History Duration

Credit history duration is essential to calculate a person’s credit score. Cancelling a credit card lowers the average age of the accounts you have with credit, which may have a minor negative influence on your credit score. If the credit card you’re cancelling belongs to one of your earliest accounts, its effect may be more significant. Yet, continually keep in mind that the effect fades gradually as freshly opened accounts become included in your credit report.

Credit Mix

A broad credit mix, including loans, credit card debt, and mortgages, can improve your credit score. Closing a credit card can decrease the number of credit categories in your identity, thus impacting your credit mix.

On the other hand, the effect on this element is typically modest compared to other considerations, such as payment history and credit utilisation.

Payment History

Once you cancel a credit card, the entire payment history linked to it appears on your credit record. Whatever happens when you close the account, the fact that you maintained regular payments on the account in question will continue to positively affect your overall credit rating.

What to Look for When Cancelling a Credit Card

As previously stated, there is no conventional way to cancel a credit card. Yet, especially when cancelling a credit card, you must comply with particular steps. Implementing the steps outlined here enables you to minimise the negative impact that cancelling a credit card may have on your credit score.

Clear the Balance that is Remaining on the Credit Card: Whenever you decide to stop using your credit card, you have to pay off the balance that remains unpaid. Without having this, you will be unable to close the credit card you are using. Understand the cancellation methods and the fines that you, as the owner, may have to reimburse for.

Redeem up any unused rewards on your card: Whenever you use a credit card to make purchases, you receive points for rewards. These reward points must be redeemed before closing the credit card.

Be Sure to Discontinue Automatic Payments for Bills and Transfers: Before you close your credit card, you must disable any automatic payments of bills or transfers. However, if you skip to go about it, you may have to cover the card’s costs if the banking institution does not respond to the cancellation request you submitted.

In advance of deactivating the credit card, be certain there are no last minute penalties. Review the credit card’s most recent statement to ensure that there are no unexpected charges.

Clear Off all Associated Charges: In advance, if you decide to cancel your credit card, clear off all of the charges related to it. Speak to the representatives from customer service to find out the precise date when the credit card will be deactivated. Once you submit a request for a cancellation of the credit card you are using, be certain you’re following up with the bank that issued the card to discover the precise date the card is going to be cancelled. By doing so, you avoid paying any additional fees and expenses.

Receive a Written Statement from the Issuer: Receive a statement of closure from the credit card provider indicating that the credit card has been deactivated. This is extremely significant because, as previously said, it makes it easier to keep track of when the credit card has been cancelled by the bank. Hence, verify everything to get official evidence from the provider.

How to Reach the Customer Support of Different Card Issuers

BankCustomer Care Number
k of India1800 180 1290
Axis Bank1800 209 5577
Kotak Mahindra Bank1860 266 2666
HSBC1860 500 2277
HDFC1800 266 4332
YES Bank1800 103 6000
IndusInd Bank1860 500 5004
American Express1800 419 1092
Bank of Baroda1800 225 100
IDBI Bank1800 200 1947
RBL Bank1800 121 9050
Bank of India1800 220 229 / 1800 103 1906
Corporation Bank1800 22 6606

The Ways to Close a Credit Card

Once you intend to cancel a credit card, you must follow certain steps. Currently, there is no set method for cancelling a credit card, and the method of doing so varies from bank to bank.

The procedures listed below can be used for securely closing a credit card by attempting any of these methods:

  • Cancel your credit card by calling customer service.
  • Forward an application in writing to the issuer or bank that issued the credit card.
  • Send an email asking for the cancellation of the credit card.
  • Sending in a request electronically to close your credit card.

Is it a Smarter Choice to Close Unused Credit Cards?

If you haven’t used a single one of your credit cards in many months, you may have thought of cancelling it. Lots of professionals recommend keeping not-used credit card accounts active because cancelling them can hurt your credit score. The score you receive for your credit is made up of the following elements:

  • New credit
  • Credit Utilization
  • The Length of the Credit History You Have
  • The Remaining Balance
  • Credit mix

Your not-used credit card has a significant effect on your credit history, duration, and utilization.

If you’ve used a credit card for around 2–3 years, shutting it down could be a poor decision. However, if you have just used your card for a brief period before closing it, it will probably have no impact on the credit score you have. An unused credit card has a substantial limit on your credit locked in, which improves the credit utilization ratio and credit score. Listed below are a few situations where you may think about cancelling an unused credit card.

  • If the credit card you’re using is lacking in providing benefits at all,.
  • Whereas you’re dealing with too many credit card accounts.
  • If your credit card’s yearly charges are extremely high,.

Check Here the Pros and Cons of Cancelling a credit Card

There will be fewer accounts with credit to keep track of. If a credit card isn’t making you happy, you should consider cancelling it. In this manner, you may reduce the variety of credit accounts you keep track of and handle.Your credit score can fall. The cancellation of a credit card may cause issues with the algorithm used for calculating your credit score. Taking this step can reduce the duration of your credit history while increasing your credit utilization percentage (over 30%). Therefore, your credit score may decline.
If you regularly pay a yearly charge, cancelling a card may help you save money. Additionally, if you want to continue maintaining your debt under control, having no extra card in your pocket will help you resist the desire to spend beyond your means.It may have an impact on credit approvals. After closing your credit card, it can take a while for the score on your card to recover. According to your credit history, it could hamper your capacity to apply for additional credit offerings that include a mortgage, an auto loan, or an additional credit card.

How to Cancel Your Credit Card With Just a Slight Credit Score Effect?

  • Pay off the Debt on Your Credit Card
  • Whenever closing down, make sure that everything has been reimbursed in full and that there are no remaining liabilities.
  • Please make payments of the outstanding amount, discontinue using the card, and disable any tentatively scheduled automatic transfers.
  • You may additionally transfer the balance to an entirely different kind of credit card.
  1. Confirm that You Have Cancelled the Card

After cancelling the card, collect a written acknowledgement of its cancellation. This evidence will come in handy in case you ever need to conflict your credit record entries.

  1. Monitor the Details of Your Credit Report

Review the reports on your credit to verify that all the data has been properly submitted to the credit rating organization.

  1. Handle Your Other Credit Cards Wisely

When you rid yourself of your credit card, do the whole thing that is necessary to maintain excellent standing: Maintain routine and timely instalment payments on every single one of the remainder of your accounts with credit.

Once you keep going to use credit wisely, your credit standing will steadily improve.

However, it might take a little while, so you should avoid incurring additional debt, such as a mortgage or vehicle loan until your score improves.

What are the Available Alternatives to Closing a Credit Card?

If you’re unprepared to cancel a credit card but prefer to maintain your credit properly, try these options:

  • Holding a credit card operationally can help you build a longer credit history and enhance your credit utilization ratio, especially if there is no annual charge and you avoid unnecessary use. Use it selectively for small transactions and make prompt payments.
  • The issuer of credit cards may offer the option of transferring an existing card to an entirely different kind of card. In this case, you can change from a card that is expensive with a yearly charge to a no-fee or low-cost card.
  • They may offer a variant of the card with lower fees and advantages, enabling you to continue keeping the account active without paying hefty charges. This allows you to preserve your credit history and advantages without having to terminate.

Bottom Line

Although the consequences are usually small and can be easily minimized by practicing prudent credit practices, You can keep your credit score strong by being decisive and accountable in handling it.

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