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What’s The Correct Way To Close Your Credit Card?

Adhil Shetty

Q. I have a credit card that I’ve been using for six years, and I’m considering closing the account since I don’t use it a lot. What’s the best way to get rid of this card? – B. Lewis

A. The fact that you have a credit card that old means that you’ve been able to manage a credit line without problems for a lengthy period, and this contributes positively to your credit score. If you close this account now, the age of your credit lines will fall, and this may negatively impact your credit score by a small margin. So you may want to hold on to your card longer.

If the card’s benefits aren’t relevant to you, or if the spending limit is too small, you can speak with your bank about getting a better card or a higher spending limit. That said, if you have decided to part ways with your card, make sure you settle all your dues, encash all your rewards, and terminate any auto-payments linked to the card such as the payment of utilities. Clearing your dues is the most important thing you need to do. Unpaid dues on your card can also wreck your credit score.

Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil