 TITLE: What to Consider Before Canceling a Credit Card CONTENT: Follow These Steps Before Canceling a Credit Card\n-------------------------------------------------\nWhether you're canceling your credit card to eliminate the temptation to spend, get rid of a pesky annual fee or avoid carrying too many similar cards, here are some questions to ask yourself before you start the process.\n### 1\\. Am I Carrying a Balance on the Card?\nIt's best to pay off a credit card account in full—or transfer the balance elsewhere—before closing it. That way, you can wash your hands of the account completely.\nTo do this, stop using the card for new purchases and either transfer your current balance to a different credit card or pay it off altogether. Also, make sure there aren't any recurring charges that will hit the account after you've paid down the balance, which can delay the process.\n### 2\\. How Long Have I Had the Credit Card?\nThe age of your credit accounts is one of the factors that help determine your credit score. There are two elements that determine the length of your credit history: how long you've been using credit and the average age of your credit accounts.\nCanceling a credit card will affect the average age of your accounts, but not always immediately. An account in good standing will stay on your credit report for 10 years, and your payment history on that account will be factored into credit scores the entire time it remains. You might see credit score effects when it comes to length of credit history, however, since closed accounts aren't weighted as heavily as accounts you still use, and not every credit scoring model treats closed accounts the same way. Also, once it's closed, the account won't continue to age and increase your length of credit history any more than it already has.\nBefore closing a credit card that you have had for a long time, consider whether you really need to. If you don't use it and don't want to be tempted by it, store the card in a secure place or even cut it up.\nIf you're worried about potential fraud, some credit card companies allow you to freeze your card account via their mobile app, making it impossible for anyone to use it for new purchases.\nThat said, some credit card issuers may choose to cancel your card due to inactivity if you haven't used it in a while. The timeline can vary by issuer, but if you're not planning to cut up the card, consider using it to make a small purchase every six to 12 months and to keep it active.\n### 3\\. Is There an Annual Fee or Security Deposit?\nIf you're paying an annual fee on a credit card you don't use much, and don't feel you're getting enough value from the card's rewards or perks, it may make sense to cancel it.\nBut if the annual fee is the only reason you want to cancel the card, call your issuer and ask them if they can either waive the fee or convert the card to another one that doesn't carry an annual fee. This may allow you to keep the account open at no additional cost.\nIf you have a secured credit card and you've improved your credit score enough that you qualify for an unsecured card, consider asking the card issuer if you can get your deposit back but keep the account open.\nIf you can't get the card's annual fee waived, have it converted it to one with no annual fee or get your deposit back, canceling the card may be your best option.\n### 4\\. Will They Make Me a Counteroffer?\nIf you're considering closing your account, you can always call your card issuer and let them know—they may make an offer to try to get you to stay. They may say you're qualified for bonus rewards if you keep the account open and spend a certain amount within a set time period. Or you may score a lower interest rate or have your annual fee waived. There's no guarantee you'll get an offer, but it doesn't hurt to find out.\n### 5\\. How Will Closing This Account Affect My Credit Utilization Rate?\nA big factor in determining your credit score is your credit utilization rate, which is calculated by dividing your credit card's balance by its credit limit. That same calculation is also done using the sum of all of your credit card balances and credit limits.\nWhen you close a credit account, you decrease the amount of credit available to you, which increases your credit utilization rate across all of your remaining cards.\nFor example, if the total credit available to you across all your cards is $10,000, and your current balances amount to $2,000 a month, your utilization rate is 20%. But if canceling a card drops your total available credit to $6,000, and the total of your balances on your remaining cards stays at $2,000, your utilization rate will be 33%.\nCredit experts recommend keeping your utilization rate under 30%, and the lower, the better. If canceling a card, especially one with a high credit limit, would drastically increase your credit utilization rate, it may be a good idea to work on paying down your other card balances first to avoid a negative hit to your credit score.\nTo figure out your credit utilization rate:\n1.  Pull your most recent credit card statements.\n2.  Add up the statement balance for all your credit cards.\n3.  Check the limits on all your credit cards and add them up.\n4.  Divide the sum of your balances by the sum of your credit limits.\nWith this in mind, check to see how canceling one card will affect your utilization rate before you proceed.\n### 6\\. Do I Have Unused Rewards?\nDepending on the type of credit card you have, you may forfeit unused rewards if you close it. This is particularly true with cash back credit cards and cards that earn points or miles with a card issuer's proprietary rewards program—think American Express Membership Rewards and Chase Ultimate Rewards.\nIf you have a rewards balance, try to redeem what you have or figure out if you can transfer your points or miles to another card you may have in the same rewards program or to a spouse or partner.\nIf you have an airline credit card or a hotel credit card, all the rewards you earn are transferred to the frequent flyer or hotel rewards program of the co-branded partner. This means that if you close the account, it won't affect your rewards at all. END