Thinking of Cancelling a Credit Card? Here’s How to Minimize the Impact on Your Credit Score

Credit cards provide convenience and rewards, but you might consider cancelling one due to high fees, infrequent use, or to curb overspending. While it can feel like a smart move, it may affect your credit score. Here’s how to minimize the impact:

• Pay Off Outstanding Balances: Settle all dues before closing the card. Leaving a balance can lead to ongoing interest and penalties.

• Manage Credit Utilization: Consider transferring balances or increasing limits on other cards to maintain a healthy credit utilization ratio.

• Avoid Closing Multiple Cards at Once: Doing so can significantly lower your available credit and shorten your credit history, both of which can hurt your score.

• Keep Older Cards Open: Retain accounts with long histories, as they boost your average account age—a key factor in credit scoring.

• Monitor Your Credit Report: After cancellation, check your report to ensure the closure is recorded correctly and no errors appear.

• Redeem Rewards First: Use any remaining points or benefits before cancelling, as they may be lost once the account is closed. 

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