How to Close a Credit Card the Right Way in 2025

Closing a credit card seems like a simple task—just cut it up and you're done, right? Not quite. How you close a credit card can have a significant impact on your financial health, particularly your credit score. While it can sometimes be a smart move, it's crucial to understand the process and potential consequences first. In many cases, what you really need is a better way to manage your finances, which is where alternatives like a fee-free cash advance from Gerald can provide flexibility without the complexities of credit card debt.

Before You Close: Key Things to Consider

Before you pick up the phone to cancel your card, take a moment to weigh the pros and cons. The decision can affect your credit score in several ways. According to the Consumer Financial Protection Bureau, closing an account can have unintended consequences. One of the biggest factors is your credit utilization ratio—the amount of credit you're using compared to your total available credit. Closing a card reduces your total credit limit. If you carry balances on other cards, your utilization ratio will instantly increase, which can lower your credit score. Another key element is the length of your credit history. If the card you're closing is one of your oldest accounts, it could shorten the average age of your credit history, another factor that can negatively impact your score. For more details on this, explore our guide on credit score improvement.

A Step-by-Step Guide on How to Close a Credit Card

If you've considered the impacts and still want to proceed, following the right steps is essential to protect your financial standing. Doing it correctly ensures the account is closed properly and minimizes any negative fallout. This methodical approach is a core part of responsible debt management.

Pay Off Your Remaining Balance

You cannot close a credit card that still has a balance. The first and most critical step is to pay off what you owe in full. Interest will continue to accrue on any remaining balance even after you've requested to close the account, so getting it to zero is non-negotiable. If you have a large balance, create a payment plan to tackle it before making the call.

Redeem All Your Rewards

Don't leave money on the table. Before you close the account, make sure to redeem any accumulated rewards, whether they are cash back, points, or miles. Once the account is closed, you will almost certainly forfeit any remaining rewards. Check your account statement or log in online to see what you've earned and use it up.

Contact Your Credit Card Issuer

With a zero balance and redeemed rewards, it's time to contact the card issuer. You can usually do this by calling the customer service number on the back of your card. Some issuers may allow you to submit a closure request online or through written mail. When you speak to a representative, be clear that you want to close your account. They may offer you incentives to keep it open, such as a waived annual fee or a lower interest rate. Be polite but firm in your decision.

Get Written Confirmation and Monitor Your Report

After you’ve requested the closure, ask for written confirmation. This document is your proof that the account has been closed at your request. Keep it for your records. About 30 to 60 days later, check your credit reports from the major bureaus to ensure the account is listed as "closed by consumer." You can get free copies of your report, as explained by the Federal Trade Commission. If it's not reported correctly, dispute the error with the credit bureau.

What Are the Alternatives to Closing a Credit Card?

Closing a card isn't always the best solution. If you're struggling with a high annual fee, ask the issuer if you can downgrade to a no-fee card. This allows you to keep the credit line open, preserving your credit history and utilization ratio. If your goal is to avoid high-interest debt, consider using other financial tools. A Buy Now, Pay Later service like Gerald lets you make purchases and pay over time without interest or fees, preventing you from racking up new credit card debt. For unexpected expenses, a credit card cash advance comes with high fees and immediate interest. Instead, you can use a cash advance app like Gerald to get the funds you need without any of those costly charges. Many people find that the best solutions are flexible and fee-free.

When is it a Good Idea to Close a Credit Card?

Despite the potential downsides, there are valid reasons to close a credit card. If a card has a high annual fee and you're not using its benefits enough to justify the cost, closing it could save you money. It can also be a good strategy for individuals who are tempted to overspend and want to remove that temptation by reducing their access to credit. Another common reason is after a major life event, like a divorce, to separate joint financial accounts. The key is to close the right card—typically a newer one with a low credit limit that won't drastically affect your credit utilization or history length. Need a flexible financial tool without the risks of credit cards? Check out our instant cash advance apps to see how Gerald can help.

Frequently Asked Questions About Closing Credit Cards

Does closing a credit card hurt your credit score?
It can. Closing a card can increase your credit utilization ratio and potentially shorten the average age of your credit history, both of which can cause a temporary drop in your credit score. The impact is usually greater if you close an old account or one with a high credit limit.
What happens to my payment history when I close an account?
A closed account with a positive payment history will typically remain on your credit report for up to 10 years and continue to contribute positively to your credit history during that time. An account with negative marks, such as a late payment, will stay for seven years.
Should I close my oldest credit card?
It's generally not recommended to close your oldest credit card. The length of your credit history is a significant factor in your credit score, and closing your longest-held account can reduce your average credit age, potentially lowering your score.
Is a cash advance a loan?
Yes, a cash advance is a type of short-term loan you take against your credit card's line of credit. However, unlike regular purchases, a cash advance often comes with high upfront fees and starts accruing interest immediately at a higher rate. This is why many people prefer fee-free alternatives.

Disclaimer: This article is for informational purposes only. Gerald is not affiliated with, endorsed by, or sponsored by Consumer Financial Protection Bureau and Federal Trade Commission. All trademarks mentioned are the property of their respective owners.