We’ve all seen those dramatic moments in the movies when a spend-happy shopaholic gets their card seized and cut up by an unsympathetic store associate.


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However, contrary to popular belief, cutting up one’s card is very different than canceling it. We debunk the myth and show you the true distinction between the two.

Canceling your credit card


  • Canceling your credit card is the only way to truly close your account. By simply calling the phone number on the pack of your card, you can tell a representative you wish to cancel your card.
  • If you struggle with debt and can’t control your spending, canceling your card may help you get back on track to living a debt-free life.
  • By eliminating multiple cards, you can practice using cash only, and when ready, you’ll be able to take on a small amount of credit to use responsibly, which will be important in building a good financial history.


  • Though you’ll be canceling your card, you’ll still have to pay off the balance.
  • Unless you ask the creditor to note the cancellation as “closed by customer request,” the issuer may put a negative note in your credit report.
  • You’ll be losing out on the rewards you can earn when using a credit card.
  • Your utilization ratio will be impacted. When your account closes, you lose the value of the unused credit limit on your canceled card, which can can hurt your credit score, particularly if you have high balances on other cards. In a perfect world, you’d have zero balances for all your active credit cards so that your ratio is zero, and can’t be raised by closing one account. However, you can offset the impact of a closed card by requesting a credit limit raise on one of your other cards to maintain a good ratio.
  • If your card is old, canceling it may worsen your utilization ratio even more, as a longer positive history is taken into particular consideration on credit scores.

Cutting up your card

Cutting your credit card is an essentially meaningless gesture. The popularized notion in the movies portrays a stern sales associate confiscating your card and cutting it to shreds. However, catching this in person is rare.

To give a little background as to why stores do sometimes cut cards, this action stems from the card issuer. For instance, if you’ve maxed out your credit card, the issuer may want to take your card back, which they are one hundred percent within their rights to do, because technically, that card is their property. In certain cases, stores will take your card, cut it up, and mail it back to the card issuer.


  • Cutting up your card can be a liberating feeling!
  • Making the decision to cut your card can help you curb your spending, since you’ve destroyed physical evidence of the card. You won’t be able to swipe it at the mall or use it online.
  • Later on, if you decide to use your card again, you can order a replacement card from the bank, as customers often damage their cards through excessive use.


  • If you want to close your account permanently, cutting your card will not work. Your account will still exist, but it will be considered a “dormant account,” which can negatively affect your credit.
  • Inactive usage patterns are costly to card issuers, and eventually, your credit card issuer may close your inactive account.
  • If the limit of the card was low and your debt is low, you won’t see much of an impact. However, if you have high debt on your remaining cards, or the card’s limit was high, this will impact your credit score.

If you have a lot of debt, an alternative to canceling all your credit cards is to do a balance transfer. Having only one card to pay off can simplify your life and enable you to make just one monthly payment instead of many.


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