Deciding to cancel a credit card is more than just cutting up the plastic. In Canada, the process—and its implications—can affect your credit score, financial flexibility, and future borrowing options. This guide walks you through exactly how to cancel your credit card the right way, what to check before and after, and how to avoid pitfalls.
Why Cancel a Credit Card?
There are valid reasons to cancel a card:
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You’re paying an annual fee for a card you no longer use.
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You’re simplifying your finances and reducing the number of accounts.
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You’re trying to break a habit of overspending on that card.
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You’ve switched to a better card and no longer need the old one.
but it’s important to understand that cancellation can have downsides too—especially for your credit score and available credit limit.
What Happens When You Cancel a Credit Card
Payment History & Balance
Before the card can be properly closed, you must pay off the balance in full. According to the Financial Consumer Agency of Canada (FCAC):
“What doesn’t cancel your credit card account: cutting up your card, letting it expire, or simply not using it.”
If you stop using the card but leave it open, the account still influences your credit file.
Available Credit & Utilization
When you cancel a card, the amount of available credit you have decreases. That could raise your credit utilization ratio (the amount of credit you use vs. your available credit), and a higher ratio may lower your credit score.
Credit History (Age of Accounts)
The length of your credit history is a factor in credit scoring. Cancelling your oldest card may shorten your average account age, which can impact your score.
Reporting
Once you cancel the card, it may take up to about 30 days for the issuer to report the closed status to the credit bureaus. The FCAC notes this reporting delay.
Step-by-Step: How to Cancel Your Credit Card
Here’s a practical roadmap:
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Pay off the entire balance.
You can’t close the account properly until your balance is $0 (including any pending transactions or interest). -
Cancel or update any recurring payments.
If you have subscriptions or automatic charges on the card, switch them to another payment method. Otherwise the account may pick up charges after closure. -
Redeem rewards or points.
If your card has rewards or cashback, use them before cancelling—once you close, you may lose those perks. -
Contact the issuer to request cancellation.
Use the customer service number on your card or statement. You may call or write. Ask for confirmation in writing that the account has been closed. -
Destroy the physical card.
Cut it up, remove stored data, and ensure no further charges can be made. -
Check your credit report.
After about 30–45 days, verify that the account appears as “Closed” and balance $0. Correct any errors with the credit bureaus.
When Might You Not Want to Cancel a Card?
Cancelling a credit card isn’t always the best move. Consider this:
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If the card has no annual fee and you aren’t overspending, keeping it open can boost your available credit and length of credit history—both positives for your score.
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If cancelling many accounts in a short time, this can compound negative effects on your credit.
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If you plan to apply for major credit soon (mortgage, car loan), maintaining your credit profile intact may help.
Minimising Negative Impact
If you decide to cancel, take steps to reduce the risk of hurting your credit:
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Choose the card with the lowest limit or newest account rather than your oldest/strongest line.
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Keep other credit lines open and use them responsibly, paying full balances.
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Maintain overall credit utilization below ~30% across your cards.
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Wait for at least a few months after cancellation before taking out new major credit.
Common Questions
Q: Will cancelling my card immediately drop my score?
A: Not always, but the potential exists. The effects depend on your overall credit profile. According to Scotiabank:
“A cancelled account can cause your credit score to drop by shortening your credit history and increasing your credit utilization ratio.”
Q: What if I just stop using the card instead of cancelling?
A: This may preserve the credit history and limit, but issuers may eventually close inactive accounts themselves. Also, unused cards can carry risk of fraud. Reddit users note:
“As long as they have no annual fees, leave them open. It’s good for your credit history.”
Q: Can I cancel online or via the mobile app?
A: Some issuers support it, but most require you to call or send a secure message. For example, some banks allow cancellation via secure message.
When Cancelling Makes Sense
Here are legitimate reasons:
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The card has high annual fee and you no longer use it.
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You are seriously overspending on that card and want to eliminate temptation.
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The card has poor benefits and you’ve upgraded to a better product, and you’ve handled switching wisely.
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You’re closing a joint account due to separation/divorce to avoid liability.
Example Scenario
Case Study: Sarah in Ontario
Sarah has a credit card she rarely uses, with a $100 annual fee. She’s decided she no longer needs it. She:
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Pays off the final balance to zero.
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Moves her recurring Netflix payment to another card.
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Logs in to her issuer’s secure message and submits a cancellation request.
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Receives written confirmation from the issuer.
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Cuts up the physical card.
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45 days later, she checks her credit report and sees the account listed as “Closed”.
She chose this route knowing the card had minimal value to her and the fee was unnecessary.
Final Thoughts
Cancelling your credit card can be a smart decision—but it’s one that warrants planning. If done carelessly, it may impact your credit score and available credit. But if you follow the steps—clear your balance, redirect payments, request written confirmation, and monitor your report—you can cancel responsibly and minimise any negative effects.
If your goal is to streamline, save money on fees, or reduce temptation, this process gives you control. Just ensure you’re cancelling for the right reasons, and are aware of the implications.
