Cancelling a Credit Card, Is It Bad For Your Credit Scores?

There are many reasons why you may want to cancel your credit card, including but not limited to wanting to cut back on the number of credit cards you have, trying to rely less on credit, or finding a card that better suits your needs. Whatever your reason is, you should understand how cancelling your credit card can affect your credit to see if it is the right solution for you. 

How Does Cancelling A Credit Card Affect Your Credit? 

There are two major ways your credit scores may be affected by cancelling your credit card. When you cancel a credit card, it will impact your credit history and debt-to-credit ratio, two common factors that are used when calculating a credit score.

Depending on the credit scoring model, the exact impact it will have on your credit scores will vary. This is because every credit scoring model is different and may put more or less emphasis on these factors when calculating your credit scores. 

How Is Your Credit History Affected When You Cancel A Credit Card?

Your credit history refers to the average age of your credit accounts. The longer you have your credit accounts open, the higher the average age will be. Your credit history is very important as it provides future creditors and lenders with information about your credit habits and is often used to calculate your credit scores.

Your credit history usually accounts for 15% of a credit score, however, it can be worth more or less depending on the credit scoring model used. When you cancel a credit card, you’ll be reducing the average age of your credit accounts, which may negatively impact your credit scores. 

How To Minimize Impact On Credit History When Cancelling A Credit Card? 

If you want to cancel one or several credit cards because you have too many, cancel the newest ones. Always try to hold onto the card that you’ve been using for the longest.

How Is Your Debt-To-Credit Ratio Affected When You Cancel A Credit Card?

Your debt-to-credit ratio refers to the amount of available credit you have compared to the amount you’ve used. It can be calculated by dividing all of your revolving credit balances by the  total revolving credit limits.  Your debt-to-credit ratio typically accounts for about 30% of your credit scores, meaning it can have a big impact on your credit. In general, lenders like to see a ratio of 30% or below, however, a higher ratio doesn’t automatically mean you’ll hurt your credit. 

How To Calculate Your Debt-To-Credit Ratio when Cancelling A Credit Card?

Let’s say you have three credit cards and each has a $5,000 limit which means your total credit limit is $15,000. Now let’s say, you carry a balance of $2,000 on two of the three credit cards and $500 on the third. This would equal a total balance of $4,500. This means your debt-to-credit ratio is 30%. 

Now, if you were the cancel the third credit card after paying off the $500 balance, you’d be left with a credit limit of $10,000 and a credit balance of $4,000. This would cause your debt-to-credit ratio to increase by 10%, to 40%.

If your credit utilization ratio is too high, your credit scores may be negatively affected. Furthermore, potential lenders do not like credit utilization ratios that are too high as it shows them that you might have a debt problem.

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How To Cancel A Credit Card?

1. Pay Off Your Balance –  Before you can cancel your credit card, you need to ensure that your credit card balance is at zero. 
2. Cancel Any Pre-Authorized Payments – Be sure to cancel any pre-authorized payments and subscriptions associated with your credit card. If you don’t you will still be charged by these services. Moreover, your charges may accumulate and accrue interest until you pay them even if you close your credit card account.
3. Redeem Points – Before closing your account, ensure you use your credit card points. If you don’t you risk losing them when you close your account. 
4. Cancel Card – Now you can cancel your credit card account. Most credit card issuers will allow you to cancel your card online, by phone or by going to the bank in person. 
5. Confirm Cancellation – Once you cancel your card, ensure you get a written confirmation either by email or by mail.
6. Check Your Credit Report – After about a month, check your credit report to ensure your credit card issuer has correctly reported the information to the credit bureaus. 

Tips On Cancelling A Credit Card 

When cancelling a credit card, consider the following to help minimize the impact on your credit scores. 

Points And Fees

Is the card you want to cancel costing you money? Or, are you accumulating points that are actually useful to you? These are questions you need to consider carefully when deciding if you want to cancel a credit card. If you have a rewards credit card with a serious yearly fee, ask yourself if those points are worth the cost.

Finally, if you do decide to cancel a rewards credit card make sure you use up the points or find out what will happen to them when you cancel. You might not want to waste all the points you’ve accumulated just to cancel a credit card.

Your Card’s Balance

This factor is definitely less important than your credit utilization but it’s still something that you need to consider and deal with. If you decide to cancel a credit card, you need to make sure that you have paid off any balance that it might have had. The reason you need to double-check is because your credit card provider will allow you to cancel a card even if it has a balance. Leaving behind an unpaid balance or interest charges could seriously affect the health of your credit.

Try A Product Switch

If you want to cancel your credit card due to the annual fee, consider asking your bank to switch your current credit card to a no-fee credit card. Some banks will allow this, however, it must be with the same issuer of your current credit card.

Avoid Cancelling Your Oldest Card 

If possible cancel your new credit cards over your older ones. This can minimize the impact it has on your credit history. Similarly, avoid cancelling multiple credit cards within the same period. This will could not only affect your credit, but it may be a red flag for some lenders. 

Additional Reading

Best Balance Transfer Credit Card In Canada 2025

What Does It Mean To Have A Negative Credit Card Balance?

What Are Grey Credit Card Charges?

Credit Card Cancellation FAQs

Bottom Line

Your credit scores are very important, but it’s not as important as being debt-free or having a good handle on your finances. If having too many active credit cards is negatively affecting your life or debt levels then it may be in your best interest to put those things above your credit scores.