Closing a credit card might sound easy, but there are some things you need to watch out for. If you don’t do it the right way, you could hurt your credit score. Don’t worry! We’ll show you simple steps to close your card safely and protect your score.
Quick Look
- Pay off your balance completely and double-check it’s $0.
- Use all your rewards, like points or cashback, before closing.
- Keep your oldest card open if possible, and close a newer card instead.
- Call the credit card company to close the account officially.
- Check your credit report to ensure everything is correct.
Action Steps to Be Successful
Pay Off Your Balance
Why it’s important:
Before you close your credit card, you must pay off any money you owe. Even if you stop using the card, the balance doesn’t go away. If you close the card with a balance, you’ll still have to make payments and might end up paying more in interest or fees.
What to do:
- Check your latest credit card statement to see how much you owe.
- Pay off the full amount so your balance is $0.
- Wait until your next statement arrives to confirm there’s nothing left to pay.
Look out for:
- Hidden charges: Some cards have fees that pop up even if you’re not using them. Make sure your account shows $0 balance before closing.
Use Any Rewards Before Closing
Why it’s important:
If your card has rewards points, cashback, or travel miles, you should use them before closing your card. Once the account is closed, those rewards may disappear, and you won’t get them back.
What to do:
- Log into your credit card account and check your rewards balance.
- Redeem your points for things like gift cards, travel, or cashback.
- Make sure you use all your rewards.
Look out for:
- Reward expiration: Some rewards expire if not used in time, so don’t wait too long!
- Transfer options: Some cards let you transfer rewards to another account, so check if that’s an option for you.
Don’t Close Your Oldest Credit Card
Why it’s important:
Your credit score looks at how long you’ve had your credit cards. The longer, the better! If you close your oldest card, your credit history will look shorter, which can lower your score.
What to do:
- Check when you opened your credit cards. This info is on your credit report or credit card statement.
- Keep the card you’ve had the longest open, even if you don’t use it much.
- If you must close a card, close a newer one instead.
Look out for:
- Annual fees: If your oldest card has a high fee, call the company to ask if they can lower or waive it. That way, you can keep it open without paying extra.
Call Your Credit Card Company to Close
Why it’s important:
Simply cutting up your card isn’t enough. You need to officially close the account with the credit card company to avoid future charges.
What to do:
- Call the number on the back of your credit card and tell them you want to close your account.
- Be ready to explain why you’re closing the card. They may offer you perks to keep it open but stick to your decision if you want to close it.
- Ask them to send you a written confirmation (by mail or email) that your card is closed.
Look out for:
- Unexpected charges: Even after closing, keep an eye on your account for a month or two to make sure no extra fees show up.
Check Your Credit Report After Closing
Why it’s important:
Once you close your card, you want to make sure everything looks right on your credit report. Mistakes can happen, and you don’t want any errors that could hurt your credit score.
What to do:
- About a month after closing your card, check your credit report from all three major credit bureaus (Equifax, Experian, and TransUnion). You can get a free copy from each bureau once a year at AnnualCreditReport.com.
- Look for the closed account on the report. It should say “closed” with a $0 balance.
- If you see any mistakes, contact the credit bureau and the card company right away to fix them.
Look out for:
- Incorrect balance: If the report shows you still owe money, even though you don’t, that needs to be fixed.
- Open status: Make sure the account shows as “closed” and not “open.”
Conclusion
By following these steps, you can safely close your credit card without hurting your credit score. Take your time with each step, and you’ll protect your financial health!
