You may want to cancel a credit card to cut back on your spending or to stop paying the associated fees. Before you cancel, consider how ditching that credit card could impact your 澳洲幸运5官方开奖结果体彩网:credit score and finances.

Understanding the Impact on Your Credit Score

Cancelling a credit card can impact your credit score in a few different ways.

Credit Utilization

Your 澳洲幸运5官方开奖结果体彩网:credit utilization ratio measures how much debt you use compared to your total available credit. If you cancel a credit card, your available credit limit will decrease. But the amount you owe on other accounts stays the same, so you could poteꩵntially drive your ut🐼ilization up.

The amount you owe on credit accounts is 30% of your credit score. If your credit utilization rate ticks upward and you are using a significant amount of your available credit, your credit score could take a hit.

Average Age of Accounts

The length of your 澳洲幸运5官方开奖结果体彩网:credit history accounts for 15% of your credit score. Typically, a longer history contributes to a better credit sc🗹ore. Your credit history length is calculated using several factors, including the age of your oldest and newest accounts and the average age of all credit accounts.

When you cancel a credit card, this can lower the average age of your ac💟counts. Canceling a credit card that is ꦺyour oldest account could have an even bigger impact on your score.

Credit Mix

Your 澳洲幸运5官方开奖结果体彩网:credit mix accounts for 10% of your credit score. Your credit mix takes into account the va💦rious types of accounts you have such as credit cards, mortgages, car loans, or student loans.

Closing a creditℱ card could mean you have a less diverse credit mix, potentially lowering your score.

Reasons to Consider Canceling Credit Card

While getting rid of a credit card may have an impact on your credit score, there are plenty of possible reasons that cancellation m🐲ay be the right choice for you.

• Substantial fees: Some credit cards charge an 澳洲幸运5官方开奖结果体彩网:annual fee. This may be the case with premium travel cards or cards offered to people with poor credit. You may find that paying the fee on a credit card is not worth the perks you receive.
• Spending control: Credit cards can be a useful tool, but they can also lead to a high debt load if not used responsibly. If you are working on 澳洲幸运5官方开奖结果体彩网:building a budget and looking for ways to control your spending, canceling a credit card may be helpful.
• Divorce: If you are going through a separation or a divorce, canceling joint credit cards is a common part of untangling your finances. You will need to decide together to cancel a shared card and how to pay off any outstanding balance.
  

Steps to Safely Cancel a Credit Card

If you've decided that canceling a credit card is the right move, you can take a few different actions to minimize any negative impact.

• Redeem your rewards: Don't forget to take advantage of any 澳洲幸运5官方开奖结果体彩网:credit card rewards before canceling a card. You may have points that can be used to make purchases or converted to cash. Some cards have airline miles rewards programs and discounts for certain purchases. You may even be able to transfer rewards.
• Pay off your balance: If you decide to cancel a card, you are still responsible for any balance on the account. You could cancel the card before paying what you owe, but you will still need to make payments with interest until it is paid in full.
• Contact the card issuer: When you are ready to cancel, you will need to contact the company that issued the credit card. Check your 澳洲幸运5官方开奖结果体彩网:cardholder agreement to see if there any additional steps you need to take to move forward with cancellation.
• Send a certified letter: Sending a certified written letter is a good follow-up measure to ensure the card issuer receives your request and follows through. You can also request the card issuer send you written confirmation of the cancellation.
• Monitor your credit reports. Keep an eye on your 澳洲幸运5官方开奖结果体彩网:credit reports following cancellation to ensure it is accurately reported. Your credit report should reflect the closure of the account and the fact that you requested the cancellation. If there is an error, you have the right to dispute it with the credit reporting agencies.
  

Common Myths About Canceling Credit Cards

There are some common misconceptions about the impact of canceling crꦰedit cards.

Many people believe that canceling a credit card will boost their credit scores. While you may have a good reason to cancel your card, you should not do so with the expectation of improvi𝓀ng your credit score. Canceling an account can lower the average length of your credit history and increase your credit utilization, both of which can have a nega💖tive impact on your score.

While closing a credit card can impact your credit score, that cancellation does not erase the positive impact of on-time payments made on that card. Closed credit cards remain on your credit reports, and impact your score, for up to 10 years.

If you cancel a credit card on which you have made on-time payments, that card can still help your credit score for the years it remains on your credit report post-cancellation. On the other hand, if you cancel a card with missed and late payments, it can remain on your credit report for up to seven years and push your credit score down.

The Bottom Line

You can cancel a credit card or simply choose not to use it anymore to reduce your credit card debt. An unused credit card can boost your credit score by contributing to your credit history and helping to lower your credit utilization. But you may have valid reasons for canceling꧙ a credit card.

If you decide to move forward with cancellation, consider the potential impact on your credit score and take the proper steps to ensure you cancel the card safely.