Canceling a credit card is a significant financial decision that requires careful consideration and proper execution. If you’ve decided to cancel your Discover card, this comprehensive guide will walk you through the process, ensuring you take all necessary steps to protect your financial health and credit score.
Before You Cancel: Essential Preparations
Before you pick up the phone to cancel your Discover card, there are several crucial steps you should take:
1. Pay Off Your Balance
It’s highly recommended to clear any outstanding balance on your Discover card before canceling. Here’s why:
- Avoid ongoing interest charges: Even after cancellation, you’ll still be responsible for any remaining balance and accrued interest.
- Simplify the cancellation process: A zero balance makes the cancellation smoother and reduces the risk of overlooking any final charges.
2. Redeem Your Rewards
Don’t let your hard-earned rewards go to waste. Discover offers several options for redeeming your cashback or points:
- Cash back
- Statement credits
- Gift cards
- Charitable donations
Take advantage of these options before closing your account to maximize the benefits you’ve accrued.
3. Notify Authorized Users
If you’ve added any authorized users to your account, it’s courteous and practical to inform them of your decision to cancel the card. This step prevents any unexpected declined transactions and allows them to make alternative arrangements if necessary.
The Cancellation Process: Step-by-Step
Once you’ve completed the preparatory steps, you’re ready to cancel your Discover card. Follow these steps:
1. Contact Discover Customer Service
There are two primary ways to reach Discover:
- Call the number on the back of your credit card
- Dial 1-800-DISCOVER if you don’t have your card handy
2. Provide Necessary Information
Be prepared to verify your identity and account ownership. You’ll likely need to provide:
- Your full name
- Account number
- Current address
The customer service representative may ask for the reason behind your cancellation. While you’re not obligated to provide this information, your feedback could be valuable for Discover’s customer retention efforts.
Post-Cancellation Steps: Ensuring a Clean Break
After you’ve completed the cancellation process, take these final steps to wrap things up:
1. Verify Account Status
Double-check that your account has been closed:
- Log into the Discover mobile app
- Check your online account management page
Ensure that any final payments have been applied correctly and that the account status shows as closed.
2. Destroy the Card
To prevent any potential misuse of your account information:
- Shred the credit card
- Cut it up, ensuring the account number is no longer legible
Important Considerations: Understanding the Impact
Canceling a credit card can have various implications for your financial health. Keep these factors in mind:
1. Impact on Credit Score
Closing a credit card account can affect your credit score in several ways:
- Credit utilization ratio: Your available credit will decrease, potentially increasing your overall credit utilization.
- Average age of credit history: If the Discover card is one of your older accounts, closing it could reduce the average age of your credit history.
2. Alternative Options
If you’re hesitant about closing the account entirely, consider these alternatives:
- Store the card safely: Keep the card in a secure place without using it.
- Request a product change: Ask Discover if you can switch to a different credit card that better suits your current needs.
Long-Term Effects: What Happens After Cancellation
Understanding the long-term implications of canceling your Discover card is crucial for managing your credit profile:
Duration on Credit Report
- Closed accounts in good standing typically remain on your credit report for 10 years from the date of closure.
- If the account was closed due to negative reasons (e.g., delinquency), these marks can stay on your report for up to 7 years from the first missed payment.
Gradual Impact on Credit Score
The effect of closing your Discover card on your credit score will change over time:
- Initial impact: You may see a slight decrease in your score due to changes in credit utilization and potentially the average age of accounts.
- Medium-term: As you maintain positive credit behaviors with other accounts, the impact of the closed account will diminish.
- Long-term: After 10 years, the closed account will be removed from your credit report entirely, eliminating any lingering effects on your score.
Alternatives to Cancellation: Keeping Your Oldest Card
If your Discover card is one of your oldest credit accounts, consider keeping it open:
Benefits of Keeping the Card
- Length of credit history: Maintains a longer average age of accounts, positively impacting your credit score.
- Credit utilization: Keeps your overall available credit higher, potentially lowering your credit utilization ratio.
Managing an Inactive Card
To keep the account active and avoid closure due to inactivity:
- Use the card for small, regular purchases (e.g., monthly subscriptions)
- Set up automatic payments to ensure timely bill payment
Addressing Potential Downsides
- If the card has an annual fee, consider requesting a product change to a no-fee Discover card.
- Be mindful of the temptation to overspend and maintain strict budgeting practices.
Future Discover Card Applications
If you decide to cancel your Discover card but want to use one again in the future:
- Discover does not reopen closed accounts.
- You’ll need to apply for a new Discover card.
- Use Discover’s prequalification tool to check your eligibility without impacting your credit score.
By following this comprehensive guide, you can navigate the process of canceling your Discover card with confidence, understanding both the immediate steps and long-term implications of your decision. Remember to weigh the pros and cons carefully and consider alternatives before making your final choice.
