How to Close a Credit Card Without Affecting Your Credit Score

Closing a credit card can sometimes impact your credit score if not done carefully. While it may seem like a simple process, there are several steps to follow to ensure your financial health remains intact. Understanding the implications and planning the closure correctly can help you avoid a negative effect on your credit history.

Check Your Outstanding Balance

Before closing a credit card, ensure that your account has no pending balance. Pay off the full outstanding amount, including any interest or fees. Closing a card with an unpaid balance can lead to penalties and interest accumulation, which may affect your creditworthiness.

Redeem Rewards and Benefits

If your card offers rewards, cashback, or loyalty points, redeem them before initiating the closure. Once the account is closed, you may lose any unclaimed benefits.

Consider the Credit Utilization Ratio

Your credit utilization ratio—the percentage of total credit used compared to total credit available—is a major factor in your credit score. Closing a card reduces your overall available credit, which may temporarily increase your utilization ratio. To minimize impact, pay down other credit card balances or avoid closing multiple cards at once.

Notify Your Bank in Writing

Contact your bank to request card closure and get confirmation in writing. This serves as proof that you initiated the closure and helps avoid any disputes over residual charges in the future.

Monitor Your Credit Report

After closing the card, check your credit report to ensure the account is reported as “closed by customer.” This prevents potential errors or misunderstandings with future lenders.

Keep Older Accounts Open When Possible

If you have multiple cards, consider closing newer ones instead of older cards. The length of your credit history influences your credit score, so keeping long-standing accounts open can help maintain your score.

Avoid Reapplying Immediately

Closing a credit card and immediately applying for a new one can lead to multiple hard inquiries on your credit report, which may reduce your credit score. Plan your credit moves strategically to avoid unnecessary drops in your rating.