When it comes to managing your personal finances, sometimes it may be necessary to cancel a credit card. Whether you’re looking to simplify your finances, avoid high annual fees, or simply no longer need a specific card, Discover Credit Card holders have various options for closing their accounts. This guide will walk you through everything you need to know about canceling a Discover credit card, including the steps to take, potential consequences, and tips for making the process smoother.
1. Reasons for Cancelling a Discover Credit Card
There are several reasons why you might choose to cancel a Discover card:
- Avoiding Annual Fees: Some Discover cards come with annual fees, which may become an unnecessary expense if you don’t use the card regularly. By canceling, you can stop paying these fees.
- Too Many Credit Cards: If you’ve accumulated multiple credit cards, it might be a good idea to cancel one or more to simplify your financial management. Reducing the number of cards you manage can help you avoid missing payments and keep track of your spending more easily.
- Reducing Debt: If you’ve accumulated debt on your Discover card and want to reduce your available credit, you might decide to cancel the card to help you focus on paying off the balance without the temptation to make new charges.
- Switching to a Different Card: If you’ve found another credit card that offers better rewards, lower interest rates, or other benefits, you may want to cancel your current Discover card and switch.
- Poor Customer Service or Experience: If you are dissatisfied with Discover’s customer service, policies, or the overall experience with your card, it could lead to the decision to cancel.
2. Things to Consider Before Cancelling a Discover Credit Card
Before you go ahead and cancel your Discover card, it’s essential to consider a few important factors that may impact your credit score and financial health:
a. Impact on Credit Score
One of the most significant consequences of canceling a credit card is the potential impact on your credit score. Here’s how it can affect you:
- Credit Utilization Ratio: Credit utilization is the ratio of your total credit card balances to your total available credit. If you cancel a card with a high credit limit, you might increase your credit utilization ratio, which can negatively impact your credit score. Keeping your credit utilization below 30% is generally recommended for maintaining a good score.
- Credit History Length: Closing a credit card account may also shorten your credit history, which accounts for about 15% of your credit score. The longer your credit history, the better. However, if your Discover card is relatively new, this may not be as significant.
- Credit Mix: If your Discover card represents a major part of your credit portfolio (i.e., you have a mix of different types of credit), canceling it might lower your credit score due to less variety.
b. Outstanding Balances and Automatic Payments
Before canceling, make sure your account is in good standing. Any outstanding balances should be paid off, and any automatic payments should be transferred to another card or account. You don’t want to accidentally miss a payment or continue accruing interest on a balance that’s left on a canceled card.
c. Rewards and Benefits
If your Discover card offers rewards such as cashback, travel points, or other perks, check how canceling the card might affect your ability to redeem those rewards. Some credit cards have expiration dates for accumulated rewards, and canceling a card might cause you to lose any unclaimed benefits.
3. How to Cancel Your Discover Credit Card
Once you’ve considered the potential consequences and decided to proceed, here’s a step-by-step guide to canceling your Discover credit card:
a. Pay Off Your Balance
Before you initiate the cancellation process, pay off any outstanding balances on your card. You want to ensure that the account is clear of debt to avoid any complications later on. If you have an outstanding balance and need time to pay it off, it’s better to keep the account open until the balance is settled.
b. Redeem Any Rewards or Benefits
If you have accumulated rewards or cashback, it’s a good idea to redeem them before you cancel the card. Most Discover credit cards allow you to redeem your rewards online or through their mobile app. Make sure you use or transfer any rewards, as some may expire if not claimed before the account is closed.
c. Contact Discover Customer Service
To cancel your Discover card, you will need to contact Discover’s customer service department. You can do this in one of the following ways:
- Phone: Call the customer service number on the back of your card or visit Discover’s website for the relevant contact information. The representative will ask you why you want to close your account and may offer you incentives to keep the card open. If you’re sure about canceling, explain your decision.
- Online: You can also manage your account online via the Discover website or mobile app. Some cardholders may be able to request cancellation by following the instructions in their account settings.
- Mail: While less common, it’s also possible to close an account by sending a letter to Discover’s customer service department. This may take longer, but it’s an option if you prefer not to speak to a representative.
d. Confirm the Closure in Writing
After you’ve requested to close your account, ask for confirmation in writing. Discover will typically send you a letter or email confirming the cancellation. This document serves as proof that your account was closed.
e. Check Your Credit Report
Once your Discover account is closed, make sure to check your credit report to verify that the account shows as “closed” and that there are no outstanding issues. You can request a free credit report annually from each of the three major credit bureaus (Equifax, Experian, and TransUnion) via AnnualCreditReport.com.
4. What Happens After You Cancel Your Discover Card?
After you close your Discover card, several things may occur:
- Account History: Your account will stay on your credit report for up to 10 years, as part of your credit history. However, it will show as “closed” and will no longer affect your available credit.
- Rewards Expiration: If you have any remaining rewards, they may be forfeited if not redeemed before closing the account.
- Credit Score Impact: As mentioned, your credit score could be affected in the short term, particularly if you have a high credit limit on the card or if it’s one of your older accounts.
5. Alternatives to Canceling Your Discover Credit Card
If you’re considering canceling your Discover credit card but are worried about its impact on your credit score, there are a few alternatives you might explore:
a. Downgrade Your Card
Instead of canceling your card, you may be able to downgrade to a no-annual-fee version of your Discover card. For example, Discover offers cards like the Discover it® Cash Back or Discover it® Student Cash Back with no annual fees. This allows you to keep the account open without paying high fees.
b. Request a Credit Limit Reduction
If you want to reduce your available credit to minimize temptation or avoid paying fees, you can contact Discover and request a credit limit reduction instead of canceling the card.
c. Use the Card Less Frequently
If the primary issue is the card’s high annual fee, consider using it less frequently to avoid charges or just keep it as an emergency backup in case you need it later.
6. Conclusion
Cancelling a Discover credit card can be a good decision depending on your financial situation and goals. However, it’s essential to understand the potential impact on your credit score, rewards, and overall financial health before proceeding. By following the steps above, you can cancel your Discover card with minimal hassle and make sure it aligns with your broader financial plans. If you’re unsure, consider exploring alternatives like downgrading or reducing your credit limit, which can provide the same benefits without the need for cancellation.
