How to Cancel a Credit Card in Canada

Cancelling a credit card is easier than you may think, but it can have a negative impact on your credit score if you don’t do it properly.

Here’s how to cancel a credit card in a way that minimizes the damage.

Steps for cancelling a credit card

Take the following steps to close your credit card account.

Pay the balance

First thing’s first, pay off your balance in full. The balance needs to be at $0 before the issuer can cancel your card.

Cancel recurring payments.

Make sure to cancel any recurring payments on your card, such as streaming services or gym memberships. If you don’t, the services could lapse when the payments bounce.

Redeem points

Redeem any points you have earned so you won’t lose them. You may also be able to transfer them to another account, like a frequent flyer points program.

Call your card issuer

When you’re ready to cancel, call or write to the lender and ask for the account to be closed. You’ll typically find the phone number on the back of the credit card. The representative may try to dissuade you from cancelling, but it’s your choice. Make sure they leave a note on your account stating that the card was closed at your request. This will ensure it doesn’t look like the account was closed by default. Write down the time, date, and name of the representative for your own records in case of a computer glitch. Ask for written confirmation that your account has been closed.

Check your closing card statement

Make sure that the closing statement shows a zero balance.

Cut up your card

Once you receive confirmation that the account is closed, cut up your credit card. A closed account typically appears on your credit report after 30 days.

Does cancelling a credit card affect your credit score?

Potentially yes, because it impacts three important aspects that make up your credit score.

Credit history

The longer you’re able to hold onto a credit card (and stay in good standing), the better it looks on your credit history. For this reason, if you need to cancel a credit card, it’s best to keep your oldest card open and cancel a newer one. Closed accounts can stay on your credit history for 10 years, after which, it’s removed from the report.

Credit utilization

Cancelling a credit card decreases your overall credit limit, which means your credit utilization will rise. For example, if you have three credit cards, each with a $4,000 credit limit and you spend $3,000 a month across all three cards, your credit utilization will be 25%. However, if you cancel one of the cards and continue to spend $4,000 across the two remaining cards, your credit utlization will go up to 38%. It’s a good idea to keep your utilization under 35% of your total available credit, and the lower, the better. This strategy will help you get approved by lenders and get better loans, mortgages, and other credit rates.

Credit mix

Lenders typically look at the types of credit accounts you own, including revolving credit. . Showing that you can handle different kinds of debt can go a long way in proving that you’re a responsible borrower. If your credit card is the only revolving credit account you have open, closing it would remove this type of credit from your report.

Reasons to cancel a credit card

There are times when cancelling a credit card is the right move. You may want to close your account if you:

Can’t afford the annual fee.
Are separating from your partner and want to close a joint card.
Don’t want to pay the inactivity fee. Some cards charge a fee when they are inactive for a set period of time, such as 12 months.
Don’t want to be tempted to use the card.

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3 things to consider before cancelling a credit card

Consider a product change. If you’re cancelling your credit card because the annual fee is too high, contact your issuer and ask about switching to a credit card with a lower annual fee in the same product family. This is called a product change, and it may not have the same negative impact on your credit history since the issuer simply transfers the account. However, product changes are not guaranteed and the process differs among issuers.
Avoid multiple cancellations. If you want to cancel several cards, spread them out. If you cancel them all at once, it could look suspicious to lenders.
Request an increase to your credit limit. You can balance out your utilization ratio by increasing the credit on any remaining cards. For example, if your overall credit limit is $12,000 across three cards and you close one, request an increase to one or both remaining cards to equal $12,000. This way, your credit utilization will stay the same.

You cannot completely close a credit card if you still have a balance owing. You need to pay it off or transfer the balance to another credit card first.

It could be. Inactivity may also lead to credit card fees and a loss of rewards points. Make sure to read your cardholder agreement’s fine print and familiarize yourself with your credit card’s specific rules.

About the Authors

Georgia Rose

Georgia Rose is a lead writer on the international team at NerdWallet. Her work has been featured in The Washington Post, The New York Times, The Independent and The Associated…

Hannah Logan

Hannah Logan is a freelance writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog EatSleepBreatheTravel.com or find her on Instagram @hannahlogan21.