Thinking about closing a credit card? Well, there are some things you should know first. For starters, when it comes to maintaining good credit scores, closing a credit card account can be a bad idea. When you close a credit card account, you risk hurting your credit by messing with your credit utilization rate and credit history, two major factors for most credit scores. That’s not to say canceling a credit card is always the wrong move. But if you’re prone to overspending or missing payments due to an overstuffed wallet, then it may be time to part ways with your plastic. Let’s break down how to go about your decision and how to cancel a credit card if you so choose.  

How Can Canceling a Credit Card Hurt My Credit Score?

Your credit score looks at a variety of factors, including the length of your credit history, or the amount of time all of your credit card accounts have been open, and your credit utilization, which is the amount of available credit that you are currently using.

Length of credit history accounts for 15% of a credit score. And when you close a credit card, the account and its history will eventually disappear from your credit report. (This usually happens within 10 years of closing an account.) Once it’s gone, it can no longer bolster your credit score.

Your amount of debt makes up about 30% of your credit score, and that calculation includes your credit utilization — the percentage of available credit you’re using on each credit card account you carry, plus the total credit limits and balances of all of your revolving credit card accounts.

As a general rule of thumb, you want to keep your overall credit utilization, and your credit utilization on each individual revolving card account, as low as possible. That’s why keeping credit card accounts with low balances and high credit lines is so good for your credit score — it keeps your total credit utilization low.

If you’re wondering about your credit score now that you understand just how important account length and credit utilization are, you can use Credit.com’s free credit report snapshot to see where you stand. It’s updated every 14 days so you can check your progress as you pay down credit card debt and move your credit utilization to 10% or lower, which is ideal.

Should I Close a Credit Card?

Given how closing a credit card can affect your credit history and your credit utilization, it can be beneficial to resist the urge to clean up your credit file by closing credit card accounts — particularly if your only reason for doing so involves thinning out your wallet. Even if you are struggling under a mountain of credit card debt, the best thing to do for your credit score is to pay down all your balances before closing any cards (otherwise you’ll risk hurting your credit utilization).

Still, there are times when closing a credit card is the right move. Say you have a card that carries a high annual fee you just can’t pay anymore. Or you’ve decided you’re simply not disciplined enough to have all that available credit at your disposal. In both cases, you may be best served by canceling the account.

Consider Some Alternatives

It’s worth pointing out that there are some other courses of action to consider if you’re thinking about canceling a credit card. Going back to our annual fee example, you can always call your issuer and see if they’ll agree to switch you over to a no-annual-fee card that comes with the same credit limit. If you’re worried about overspending, you could store your credit cards in a secure place outside of your wallet, like a safety deposit box or even a block of ice. (Note: You may want to set a small subscription to auto-pay on the card to ensure the issuer doesn’t close the account due to inactivity. Just be sure to make that credit card payment each month.) Ultimately you’ll have to assess what option is best for you.

How to Cancel a Credit Card

If you do decide you just want to get rid of the plastic, you’ll want to call your issuer’s customer service phone number and ask them to close the account. There are some other steps you’ll want to take, too, so the process goes smoothly.

• Redeem any rewards. Otherwise, you’ll likely lose them once the account has been closed.
• Pay down your balance. It may be possible to close your card with a balance, but it’s better to get that debt off the books before moving forward. Otherwise, you may lose track of what you owe and wind up missing a payment.
• Confirm a $0 balance. Before you turn a blind eye to the account completely, call your issuer to confirm that your balance has, in fact, been paid in full, lest a late fee or early billing cycle purchase comes back to haunt you.
• Monitor your credit. That’ll help you confirm that the account has been closed. Remember, it won’t disappear from your credit report completely. As we mentioned earlier, accounts closed in good standing generally remain on file for 10 years. But it should show up as a closed account with a zero balance once your request has gone through.

Jeanine Skowronski contributed to the reporting of this article.