Take these steps to cancel a card cleanly, so you won't regret it.

1. Make sure you're canceling for the right reason

Picture showing pretty woman shopping online with credit card
Kamil Macniak / Shutterstock
Cancel a card if you can't control yourself with it.

These are the reasons you might nix a credit card:

  • If your debt is unmanageable and you can’t resist the temptation to spend.
  • If the card has an exorbitant interest rate, and you've found one with 0% APR.
  • If the card charges an annual fee that's taking a bite out of your income.
  • If the card’s rewards program has changed or expired.
  • If the card’s terms have changed and you’re suddenly stuck with unwanted fees.

If the above reasons don’t apply to you, it may be best to leave the card open and not use it. Canceling the card could hurt your credit score in more ways than one.

The existing balances on your other open accounts may cause what's called your "credit utilization rate" to artificially shoot up, negatively impacting you in the eyes of creditors.

If you opt to cancel a credit card, close the newest one or the lonely card you use the least.

More: How many credit cards should I have?

Grow Your Savings Effortlessly with Moka

Automate your savings with every purchase and watch your money multiply. Moka rounds up your transactions and invests the spare change. Start building wealth effortlessly today. Join thousands of Canadians embracing financial freedom with Moka

Sign up now

2. Consider keeping the card to build credit

Hands holding plastic credit card and using laptop
Yulia Grigoryeva / Shutterstock
There's no harm in keeping a credit card open with something as small as a Spotify subscription.

Keeping a credit card open means you’re still building positive credit, even if your account is mostly dormant. You get dinged only if there’s an existing balance on the card that doesn’t get paid off, so make one small purchase a year and pay it off right away — or throw your Netflix subscription on it.

The longer you have good credit, the better you look as a candidate should you ever apply for a loan, mortgage, even a new job.

If the account is active and you’ve been nailing your payments on time, your credit is considered in good standing; closing the card could erase years of good credit and skew the average age of your accounts.

Consider keeping the account open, but putting the card in a drawer at home where you can’t access it.

Read all of the above and still want to cancel? No worries, we’ll walk you through how to do it effectively.

3. Don't let rewards die with the card

Top view of woman hand holding credit card and shopping online
wutzkohphoto / Shutterstock
Take advantage of all your card's rewards.

Many credit cards have some sort of points program — especially if the card is tied to a store rewards program.

Before you make a move to cancel, make sure you take advantage of the rewards you’ve accumulated.

Check the card or company website for details on how to redeem — and don’t cancel until you’ve milked all the rewards.

The best cash-back cards have the easiest redemption features.

More: Travel rewards vs. cash back credit cards

Unexpected vet bills don’t have to break the bank

Life with pets is unpredictable, but there are ways to prepare for the unexpected.

Fetch Insurance offers coverage for treatment of accidents, illnesses, prescriptions drugs, emergency care and more.

Plus, their optional wellness plan covers things like routine vet trips, grooming and training costs, if you want to give your pet the all-star treatment while you protect your bank account.

Get A Quote

4. Pay off your balance

Close-up of credit card statement with focus on Total Amount Due
ImagineerInc / Shutterstock
Be sure that your balance is paid off before you attempt to close out a card.

Unfortunately, canceling a card will not magically erase mountains of debt. (We wish!)

You’re still on the hook for the card’s existing balance, and failing to pay it off could torpedo your credit score.

Even if you transfer your debt to a balance transfer credit card, you could be hit with additional fees. Pay your card’s outstanding balance in full before making the move to cancel.

5. Cancel all automatic billing

Person reviewing bills, and paying them off
chingyunsong / Shutterstock
Review your bills carefully.

Make sure to cancel any recurring payments or bills linked to the card. This step is crucial.

If a merchant or service provider later tries to charge your closed account and the transaction bounces, they could report you to the credit bureau for nonpayment, which damages your credit score for up to seven years.

Additionally, you may be charged late penalties after 30, 60 and 90 days.

Creditors don’t like to see missed payments and late fees, so don’t let those long forgotten automated bills put you in the red.

6. Make a goodbye phone call

Woman on the phone in her home office, in front of the computer.
Monkey Business Images / Shutterstock
Calling the company helps tie up any loose ends.

Call the credit card company’s customer service number, usually found on the back of the card or on a statement or bill. Let the customer service rep know that you’re ready to cancel.

You will likely be asked why you’ve decided to close the account. You can give any reason you like. Ultimately, this is your decision. You’ve already weighed the pros and cons, so by this point you should feel confident that canceling is the right decision for you.

The agent will likely try to talk you into keeping the account, but stay firm. Keep a recent statement nearby so that you’re prepared to answer any questions the representative may have.

When you’re done, make certain that you receive confirmation of the cancellation in writing.

Sponsored

Trade Smarter, Today

With CIBC Investor's Edge, kick-start your portfolio with 100 free trades and up to $4,500 cash back.

Money.ca Money.ca Editorial Team

The Money.ca Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Money.ca Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.

Explore the latest articles

Best Mastercard credit cards in Canada

Here's our list of the Best Mastercard credit cards in Canada. There is a Mastercard for every type of consumer, and one can find the card that suits them best.

NS

Disclaimer

The content provided on Money.ca is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.