Closing your credit card account can be a stressful endeavor, one that's not necessarily a complicated process but still brings its share of annoyances.

There are plenty of good reasons to want to cancel your credit card. Maybe you've got a spending problem, and canceling this credit card will help you limit your ability to make unnecessary purchases. Maybe you're looking to consolidate everything in your life and you realized you simply had too many credit cards to manage.

There's work to be done and a lot to be considered before you cancel that card, however. Canceling has to be done very carefully, because it can impact your credit score. Here's what to know about canceling your credit card and how to get started.

Pros and Cons of Canceling Your Credit Card

Obviously a lot of thought has to go into whether you'll cancel your credit card. But you know this, and you've likely done plenty of thinking about it already.

So what are the benefits and drawbacks to canceling a card? Most of them will relate back to your credit score. You may have questions about if there's a way to do this that will keep your credit score perfectly pristine. The answer is... not really. Your credit score will almost certainly be affected by the cancellation, and while there are steps you can take to minimize the damage, there isn't really a way around a change to your credit score.

Still, there can be positives to canceling, usually based on your reasons for canceling. These can include:

  • Protection from identity theft
  • Keeping you from accruing more credit card debt you can't afford
  • No longer having to pay high fees
  • Prevents unnecessary spending

With that in mind, there can be considerable consequences to haphazardly canceling a credit card. The amount of credit you have, the balance on those credit cards and how long you've had them all have an impact on your credit score. Canceling one of your cards will affect all of these. Canceling an older card will change the average age of your credit accounts, and canceling one of multiple cards will change how much your overall balance is and the percentage of credit that is being utilized. All of these can knock your credit score down by quite a bit.

How to Cancel a Credit Card

You've made your decision: you're canceling that credit card. The process of preparing for and subsequently canceling your credit card requires several things of you before everything is officially canceled. These are the steps you need to take.

1. Research How Canceling Will Affect Your Credit Score

We've discussed some of the ways canceling a credit card can damage your credit score, but you should do more research into how the specifics of your credit and the card you're canceling will affect it.

Utilization ratio is an important part of your credit score. This is the ratio of how much credit you're using to how much you have. The lower your utilization ratio is, the less dependent on credit you appear to be and the higher your credit score is likely to be. Closing one of your credit cards will change your utilization ratio.

Let's say you have three credit cards, each of which have $1,000 of credit on them. One card has a $500 balance, one a $200 balance and one a $50 balance. You're using $750 of the $3,000 in credit available to you for a utilization ratio of 25%. If you decide to cancel the card with a $50 balance on it, once it's canceled you'll now be using $700 out of $2,000 in credit - a ratio of 35%. That's significantly higher, and can do real damage to your score.

2. Pay Off Your Balance

You are technically able to cancel a credit card even if you have a balance remaining, but it may not be worth it. You'll still have to pay the balance, and the bank that issued you the card may request you to pay the remaining balance in full, or raise interest rates on your payments for it after the cancellation.

As such, it's probably better for you to not have any balance on the card at all when you cancel it. You can make payments on the balance at your preferred pace, or you can transfer your balance to another card. Confirm that the balance is no longer on this card before moving forward with canceling it.

3. Use the Rewards You Have

If your card offers rewards, if they're not redeemed before you cancel them you lose them forever. So in theory, you don't have to use them. But if you have them, why not use them? It helps get rid of the entire balance on your card. Determine the specifics to redeeming your card rewards - or, if you'd prefer, figure out whether you can transfer them to another card - and completely free your card of anything before taking the next steps to canceling the card.

4. Call the Card Issuer's Customer Service

With your research done and your balance entirely emptied, you're ready to actually contact the bank about canceling your card.

Call their customer service representative and tell them that you're requesting a cancellation of your credit card. There should be a direct phone number to call on the back of your credit card. Be warned, however: that customer service rep is going to try and keep you around. They're going to remind you of all the various drawbacks to cancellations that you've already read about, and they're probably going to offer you a better deal than you're currently getting on the card - perhaps better fees, lowering your interest rate or offering you even better rewards. So if you're really set on canceling this card, hold firm. Stand your ground and resist all their offers.

5. Send a Letter of Cancellation to the Card Issuer

If you've called the customer service and canceled, you may not need to write a cancellation letter to the card issuer. But if you want to make sure you have the request in your records, send them a letter requesting the cancellation and you should receive a written confirmation back.

6. Confirm and Destroy

You should get confirmation from the bank that your card and account have been closed. You can also follow up with the bank to make sure they have canceled it, and check your credit report to see if it has been updated by credit bureaus with the information. The last - and most important - thing for you to do is destroy your credit card. Cut it up into little pieces and make it impossible for anyone to recreate it. This can mean throwing away the tiny pieces in different places and at different time intervals.