How Do You Cancel A Credit Card?

Whether you're getting rid of credit cards you no longer use, tired of paying a card's annual fee, or simply feeling the card isn't a good fit, you might be wondering how you can cancel a credit card. But before you cancel, it's important to understand the right steps to take.

You'll need to pay off any remaining balance, make sure you've redeemed any rewards, and carefully consider how cancelling might impact your credit score.

This article explains the process of cancelling a card, outlines the details to consider before doing so, and offers additional information to help you make the right decision.

How to cancel a credit card

The exact process required to cancel a credit card depends on your card issuer, but it typically includes these steps:

1. Redeem any rewards

Don't waste those hard-earned rewards! Before cancelling your card, be sure to cash them in. If you can't (or don't want to) redeem your rewards, ask to have them transferred or converted – especially if you're switching to a similar credit card with similar rewards.

Pro Tip: Check the dates carefully for time-sensitive bonuses. If your card has an anniversary bonus that grants some extra points or a free night at a hotel, you may be better off waiting a little longer before waving the card goodbye.

2. Pay off your balance and move recurring payments elsewhere

If you have credit card debt, you'll need to pay off your outstanding balance (or get a balance transfer credit card) before you can cancel your credit card. If you have recurring bills or subscriptions on your credit card, cancel them or transfer them to a different card.

Once your final payment has been processed, check your account, either online or at the bank, to ensure your balance is zero.

3. Call or go into the bank to cancel the card

Once you know you don't owe anything and you're not leaving any rewards on the table, call the bank or head into a local branch. Tell the representative you'd like to cancel the card. It should take them only a few minutes to process your request.

It's also a good idea to request written confirmation that your balance is 100% settled.

4. Check your credit report

After 30 days, check your credit report to confirm the card was cancelled, and that you have a closed account. Otherwise, you risk a recurring bill or leftover charge piling up interest, costing you money, and negatively impacting your credit score.

5. Cut up your credit card

To prevent any chance of credit card fraud, cut up your credit card so it can't be used again. If you have a metal credit card, break out the tin snips or angle grinder. Your bank can also safely dispose of the card.

Remember: Don't put your old card in the recycle or trash bin and walk away. You never know what an unscrupulous person could do with your information.

Does cancelling a credit card hurt your credit score?

You may notice a minor hit to your credit score if you cancel your credit card. Fortunately, this should only be a temporary ding.

Your credit score is based on various factors, but these are the areas that can impact closing a credit card:

1. Utilization ratio (30% of your credit score)

Of these 3 factors, your credit utilization rate is the one that will most impact your score. Credit utilization is based on the amount of available credit you use compared to your total credit amount.

Closing a credit card will reduce the total available credit under your name, meaning that your current spending will make up a higher percentage of your total credit.

If the ideal credit utilization ratio is around 30% and you're hovering around that range, cancelling a credit card and losing that access to credit could push you a lot higher than that, causing your score to drop.

2. Credit history (15% of your credit score)

If you've had the same credit card for a long time – and kept it in good standing – it positively impacts your credit score. Lenders consider the length of your credit history significant and prefer to see a high average age for your accounts.

Cancelling your longest-standing credit card can make a minor dent in your credit history – if you're considering which card to cut, a more recent one might be the better choice.

3. Credit mix (10% of your credit score)

Lenders also look for a variety of credit types, including revolving credit and installment loans – credit cards are a form of revolving credit, and car loans are a type of installment loan. So, if you cancel a credit card and it's the only type of revolving credit you have, your score will probably drop.

Remember that the more types of credit you have, the better it looks for lenders and credit bureaus. For instance, if you have some loans and a line of credit in addition to your credit card, cancelling the credit card reduces your mix of credit types from 3 to 2.

When does it make sense to cancel a credit card?

Before even asking how to cancel a credit card, you should consider why you want to do so. Upgrading to a higher-earning rewards card is one good reason to cancel an old card, as is switching to a no-fee card if you don't find enough value in the current card you pay for.

These are a few common reasons why you might choose to cancel a credit card:

• You want to switch from an underperforming card to one of the best credit cards in Canada
• You're spending too much money on a credit card and want to transition to a debit card or prepaid option
• The benefits of your current card aren't worth it anymore
• You want to transition to a card with a lower (or no) annual fee
• You have a credit card you no longer need, and don't want to pay an inactivity fee
• You're separating from your partner and want to close a joint account

What to consider before cancelling your credit card

Before cancelling, consider whether it will affect your credit utilization ratio, if you've cancelled other cards recently, and whether you'd like to have another card with the same issuer.

Whether you want to work with the same card issuer

If you appreciate your current card's issuer, but want a different type of card, consider staying with them and simply switching to a different card. Instead of cancelling your card, you could call and discuss other card choices from the same issuer.

For example, if you currently pay a high annual fee, you can call to ask about switching to a no-fee credit card. You won't need to undergo a credit check, and you'll be able to switch quickly. You can also switch between 2 cards of the same tier.

How it affects your credit utilization ratio

If you're worried about changes to your credit utilization ratio, you could request a credit limit increase instead of cancelling a card. This can help maintain your utilization ratio.

For example, if your initial credit limit on 2 cards was $5,000 each and you decide to cancel one, you could try increasing the remaining card's limit to $10,000.

How many cards you've cancelled recently

If you're closing more than one credit account, space them out a little so it doesn't look suspicious. Instead of cancelling 3 out of your 4 credit cards all at once, wait a few months in between each cancellation.

This can also help your credit score recover if it temporarily drops.

FAQ

Will cancelling a credit card hurt your credit?

Yes, cancelling a credit card can affect your credit score. It may temporarily lower your credit score. It may also have a greater impact if your credit history is shorter, your credit utilization increases, or your credit mix isn't as diverse.

How do I completely cancel a credit card?

To cancel a credit card, you should first pay off your balance and use any available rewards. Then, go into a local branch or call your card issuer's customer service and request that they close the account. After about a month, confirm the account is truly closed by checking your credit report, then cut up the old card.

Can I cancel a credit card that I just opened?

Yes, you can cancel a card you recently opened, but it might be a good idea to contact the card issuer to discuss other options. Especially if you're still looking for the right card, speaking with a representative can be a big help since they may be able to recommend a product that better suits your needs.

Is there a way to cancel a credit card with CIBC?

There are a few ways to cancel a CIBC credit card. You can make an appointment at a local branch where a representative can help, fax CIBC at 1-877-861-7801, or submit the request by mail. Otherwise, call CIBC Card Services at 1-800-465-4653 for assistance.

Can you tell me how to close an RBC credit card?

There are several ways to close an RBC credit card, but the simplest is to call 1-800-769-2512 for assistance. If you prefer, you can visit a local branch and speak with a customer service representative who can close the card for you.