How to Close a Credit Card: Steps, Rules & Things to Know Before Closing

Credit cards are versatile financial tools, offering convenience and various benefits. However, if you’ve used a credit card for a specific goal or find it no longer useful, cancelling it might be an option to consider. There might be other scenarios where cancelling a credit card might be the better option – such as your security being breached or your card being lost.

While there’s no harm in keeping multiple cards, cancelling a card requires careful consideration due to its potential impact on your credit score and finances. Here’s a complete guide to help you make an informed decision and explain how to close a credit card effectively and safely.

Before deciding to cancel a credit card, evaluate the following factors to understand the potential implications:

• Cancelling a card can affect your credit score, particularly if it’s one of your older accounts or contributes significantly to your credit limit.

• A higher credit utilisation ratio caused by cancelling the card can also negatively impact your score.

• Ensure you clear all outstanding balances on the card before closing it.

• Leaving a balance unpaid could lead to additional charges and negatively affect your credit score.

• Consider the perks associated with the card, such as cashback, rewards points, or exclusive benefits.

• If these align with your lifestyle or spending habits, you might find value in keeping the card active.

• The length of your credit history is a key factor in determining your creditworthiness.

• Cancelling an older credit card could shorten your history, potentially impacting your credit score.

• Assess whether the card’s annual fee is worth the benefits it provides.

• If the fee outweighs the perks, closing the card might be a practical choice.

• Closing a credit card reduces your overall credit limit, increasing your utilisation ratio (the percentage of credit used relative to your total limit).

• A higher utilisation ratio can negatively impact your credit score.

• A diverse credit mix—including credit cards, loans, and other accounts—can enhance your credit profile.

• If the card is your only credit card or represents a unique category, such as travel rewards, consider keeping it to maintain a healthy credit mix.

• If you’re managing multiple debts, cancelling a credit card might not be the best solution.

• Explore alternatives like balance transfers or consolidation loans to streamline payments and reduce interest charges.

Before closing a credit card, check and manage your outstanding balance carefully to avoid future issues. Start by paying off the full balance, as interest may continue to accrue even after closure. If full repayment is not possible, consider transferring the balance to another card or getting a personal loan with lower interest to repay your dues on the card. 

Redeem all reward points before closing the account, as they are usually forfeited after closure. Inform add-on card users about the closure to prevent declined transactions. Finally, switch all recurring payments and subscriptions to another card to avoid service interruptions and late payment fees. 

Once all this is done, confirm with the issuer that the account shows a zero balance after closure and keep the closure confirmation for your records.

Cancelling a credit card is a straightforward process. Here are the steps you can follow based on your preferred method:

• Contact the credit card issuer’s customer care helpline.

• Provide the necessary details and verify your identity by answering security questions.

• Follow any additional instructions provided by the representative to complete the cancellation.

• Log in to the credit card issuer’s online portal or mobile app.

• Locate the option to close or cancel your credit card and follow the on-screen instructions.

• Provide the required details and confirm your intention to cancel the card.

• Submit the request electronically and keep a copy of the confirmation for your records.

Also Read: Secured Credit Cards Vs Unsecured Credit Cards: Key Differences

Before closing your credit card, redeem all unused reward points. Once the card is closed, most issuers cancel pending points, resulting in lost value.

1. Log in to your bank’s mobile app or net banking portal and access the rewards section.

2. Check your available points and review redemption options like vouchers, travel, or products.

3. Redeem points for gift cards, shopping vouchers, bill payments, or airline miles, based on availability.

4. Complete the redemption by confirming the request, usually via OTP authentication.

5. If online redemption is unavailable, contact customer care to place a redemption request.

6. Ensure all rewards are successfully redeemed before initiating the card closure process.

There are several scenarios where cancelling a credit card might be a practical decision:

• High Fees or Interest Rates: If the card's charges outweigh its benefits, cancellation could save you money.

• Simplifying Financial Management: Reducing the number of cards can streamline your finances.

• Curbing Overspending: Cancelling a card can help avoid debt and encourage better budgeting.

• Changing Spending Habits: Lifestyle or financial shifts might make certain cards redundant.

• Seeking Better Rewards: Switching to cards with more favourable perks or lower rates.

• Security and Fraud Concerns: Safeguarding your finances after a security breach.

• Credit Score Optimisation: Strategic cancellations to improve or maintain your score.

• Non-Usage: Closing inactive cards to avoid unnecessary fees.

• Financial Upgradation: When improved finances make some cards unnecessary.

• Consolidating Debt: To aid debt consolidation efforts and prevent further accumulation.

After closing a credit card, actively monitor your credit report to ensure the closure has been correctly recorded. Check your CIBIL report after one to three months to confirm that the account is marked as “closed” and reflects a zero outstanding balance. 

If the card continues to appear as active or shows incorrect dues, contact the card issuer and CIBIL immediately to have the error corrected, as inaccuracies can negatively affect your credit score.

In addition, keep a close watch on your overall credit profile after the closure. Closing a card can impact your credit utilisation ratio and average credit age, which may cause a temporary dip in your score. 

Maintain timely payments on all remaining loans and credit cards, avoid taking on unnecessary new debt, and periodically review your credit report to ensure your credit health remains strong over the long term.

If the card isn’t incurring hefty charges, it’s often better to keep it active to maintain your credit limit and history. However, consider factors like credit score impact and utilisation rate before deciding.

Follow the steps provided by your issuer, including contacting customer care, submitting a written request, or using the online portal.

Yes, many issuers allow card cancellations through their banking portals or mobile apps. Follow the instructions provided in the relevant section.

Cancelling a card with an unpaid balance doesn’t remove your debt. You must continue repaying the balance as per the card’s terms. For cards with ongoing EMIs, you can either pay the foreclosure amount along with applicable charges or explore alternative payment solutions.

Cancelling a card may impact your credit score, especially if it shortens your credit history or raises your credit utilisation ratio. The exact effect varies depending on your overall credit profile.

Cancelling a credit card isn’t inherently bad, but it may have implications for your credit history and score. Evaluate your financial circumstances and weigh the pros and cons before deciding.

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