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How to Close a Secured Credit Card

Secured credit cards can be perfect for anyone trying to establish or rebuild their credit. But there will come a time when the secured card has served its purpose and you’re ready to move on. While it may be tempting to keep your secured credit card, you probably don’t want to be stuck with a small credit limit and high fees forever. Depending on your situation, it might make sense to close your secured card and graduate to a traditional, unsecured credit card.

Curious about which credit card is best for you?

Should You Close Your Secured Credit Card?

If you’re thinking about closing your secured credit card, chances are you’ve improved your credit. But before you close your card, it’s important to assess how that might affect your credit score.

Fifteen percent of your credit score depends on the length of your credit history. Whether closing your secured credit card has an impact on your score depends on the age of your other credit accounts. If your secured credit card account is significantly older than your other accounts, closing it could lower the average age of your accounts and hurt your credit score.

Closing your secured credit may also affect your credit utilization ratio. Secured credit cards usually have low credit lines. But closing the account could lower the amount of available credit you have overall and raise your debt-to-credit ratio. Having a credit utilization ratio above 30% could lower your credit score.

If you believe that closing your secured credit card won’t have a big impact on your credit score, the good news is that the positive credit history that you’ve established with the card can remain on your credit report for as many as 10 years.

Related Article: How to Choose Your First Credit Card

Closing Your Secured Credit Card

How to Close a Secured Credit Card

If you’re ready to close your secured credit card account, you can call the number on the back of the card and ask a representative to close the account. During the conversation, it’s a good idea to make note of who you spoke with and what their instructions were. Just keep in mind that if you’re carrying a balance, it’s best to pay it in full and get rid of your credit card debt before canceling the card.

Also, don’t forget to ask the representative about your security deposit. It’s a good idea to confirm the amount you’ll be getting back and find out how long it will take to receive the deposit. Receiving your security deposit could take between 60 and 120 days. But that may vary depending on your credit card company.

Once you’ve received your deposit, it’s best to throw away your canceled card to avoid using it or having someone steal it.

Related Article: 4 Expenses You Should Never Put on a Credit Card

Final Word

How to Close a Secured Credit Card

Canceling your secured credit card and opening a traditional credit card account may be a good idea if you’ve improved your credit score and you want a higher credit line. But before making the switch to an unsecured credit card, it’s important to consider what that’ll do to your credit.

Before closing your card, you may also want to find out whether you can simply ask your credit card issuer to upgrade your secured credit card or transfer your credit line to a new, unsecured card.

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Photo credit: ©iStock.com/skynesher, ©iStock.com/SonerCdem, ©iStock.com/sturti

Lauren Perez, CEPF® Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society of American Business Editors and Writers. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.
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