Considering closing your credit card? Here's what you need to understand about doing it properly.

If you're not using a credit card anymore, there might be advantages to keeping it active, especially if there are no fees involved. However, if the card incurs costs or encourages spending, it's wise to close it with care to protect your credit score.

Before you proceed, reflect on these questions:

  • How long have you had this card? Your oldest credit accounts can positively impact your credit score by showcasing a longer credit history. Closing your oldest card might not be wise, especially if it has a good payment history.
  • What are the costs associated with the card? If your card has a steep interest rate or an annual fee that the issuer won't waive, it may be time to close it. There's no need to throw money away.
  • Have you recently shut down other cards? Avoid closing multiple accounts at once, as this can raise red flags for lenders. If you need to close several, do so gradually to maintain a stable credit profile.
  • Will you have enough active credit accounts? Experts recommend keeping four to six credit accounts open to maintain a healthy credit score and favorable debt-to-credit ratio. This doesn't mean all credit cards; other types of loans count too.

If you choose to close a card, follow these steps:

1. Review your credit report. You can obtain your credit report once a year at AnnualCreditReport.com without impacting your score. Check for any inaccuracies related to the account you plan to close.

2. Redeem any rewards. You might apply rewards towards settling your balance. If that's not possible, use them for something enjoyable, like a game or travel miles, before closing the account.

3. Clear the balance. You must fully pay off your balance before you can close the account. If you want to prevent new charges while settling it, contact customer service for assistance.

4. Notify the card issuer. After your balance is cleared, call the issuer to request account closure. You can find the necessary contact details on the back of your card, your statement, or on their website.

5. Double-check afterward. After about 30 to 60 days, ensure that both the issuer and credit reporting agencies have updated your information. It's prudent to review your credit report to confirm that the account is marked closed correctly. Though the history will remain on your report for several years, it should indicate that the account has been closed.