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Can you cancel a credit card application

can you cancel a credit card application

You may ask, “Can I cancel a credit card I just applied for?” The truth is that cancellation depends on the credit card company and how far along your application is in the approval process. 

The average consumer has around 4 credit cards.1 But having multiple cards can make it easier to accumulate too much credit card debt. If you regret submitting an application and think it’s not the best time to apply for a credit card, keep reading. 

In this article you will learn how credit card applications work and what your cancellation options are should the need arise. 

Why You May Want To Cancel a Credit Card Application

Depending on their financial situation, there are several reasons why someone may want to cancel a credit card application from going through. 

Too Many Hard Inquiries 

Every time you complete an application for a credit card or loan, a hard credit check will be done. Too many hard inquiries on your credit profile can decrease your credit. If you have recently been applying for loans or other forms of funding, now may not be the best time to submit a new credit card application. 

Fraud Alerts

If you have been the victim of identity theft or fraud, you most likely placed a freeze on most of your financial accounts, which means lenders and financial institutions may not be able to view your data. Fraud alerts on your credit report may also prevent credit card issuers from confirming your identity and processing your application, which may then result in its cancellation. 

Credit Limit Increases

If you already have a credit account, see if you can get a credit limit increase before applying for a brand-new card. You may increase your credit limit by showing your credit card issuer that your payment history or credit score has improved, your income has increased, or that you have paid off a significant amount of debt. 

Funding Alternatives 

Instead of relying on getting a new credit account, you may want to try other forms of funding to help you out with your finances. You may be able to save money on interest rates, get a higher funding amount, or receive better payback terms with other funding options like installment loans or unsecured loans

Managing Debt

Keeping a credit card might tempt you to spend money. If you know you have money available, you may feel inclined to use it. But canceling the card could help you avoid impulsive spending and develop better financial habits. 

Rates Are Too High

If you realize that the interest rate is exceptionally high for the card, you may want to cancel the application. A high interest rate means you will spend more on fees, and you may have existing cards with lower APRs. 

How To Cancel an Application With a Credit Card Company

Unfortunately, it is unlikely you will be able to cancel a credit card application after officially submitting all the required documentation. If you are currently going through the process, you can stop. If you are in the middle of a paper or online credit card application, simply stop filling out the form and either close out of your web browser or properly destroy and throw away any paperwork you’ve completed. 

If you have already submitted your application, you can call the credit card issuer’s customer service line and tell a representative that you need help canceling a credit card application. If your application happens to be still pending or under review, you may be able to cancel the application. In this case, make sure you get written confirmation of the cancellation from the credit card company.

What To Do if You Can’t Cancel Your Credit Card Application

It’s highly recommended that you do not cancel your credit card account unless absolutely necessary. Once credit card companies process your application, your approved credit limit is added to your credit profile, where it will then be reported on in future credit reports. 

Canceling the account may cause your credit utilization ratio to go down and lower your future credit scores. Your credit card utilization ratio refers to how much available credit you have compared to how much you are currently using. High credit utilization will negatively impact your FICO score.

Keep Your Card but Don’t Use It

If you don’t use your credit card, you won’t have to worry about making monthly payments or accumulating interest charges. In fact, you may not have to spend any money on your credit card at all unless your card comes with extra charges, such as an annual fee. 

Switch Credit Cards

You can also check with your credit card company if you are able to switch credit cards. For example, say you saw a credit card offer that had better interest rates, no annual fee, or another rewards program you would prefer. In this case, you may ask your credit card issuer if they can switch your account to the other card. 

Do Credit Card Applications Go On Your Credit Report?

Yes, credit card applications are included on your credit report. Applications for credit cards, online loans, bad credit payday loans, car title loans, and other lines of credit are all included in a consumer’s credit history report. Credit card applications, if approved, will also affect your credit utilization ratio.  

Other financial information that goes on your credit report besides credit applications are: 

  • Payment history
  • Credit mix
  • Length of credit history
  • Current debts and income

Pros and Cons of Working With a Credit Card Issuer

Before you even start the application process, consider the pros and cons of owning a credit card. 

Pros of Working with a Credit Card IssuerCons of Working with a Credit Card Issuer
Credit Building: A credit card can help you build your credit score when used responsibly, making it easier to qualify for loans, mortgages, or even rent an apartment.Potential Debt: It’s easy to accumulate debt if you’re not careful, especially with high-interest rates and the temptation to spend beyond your means.
Rewards and Bonuses: Many credit cards offer rewards programs, cash back, travel points, or other bonuses that can be valuable if you make regular purchases with your card.Fees and Penalties: You may face fees for failing to use a credit card responsibly. There can also be charges for balance transfers, cash advances, and going over your credit limit.
Fraud Protection: Credit card issuers typically offer robust fraud protection and will often reimburse you for unauthorized purchases if your card is stolen.Credit Score Impact: Late payments and a high utilization can negatively impact your credit score. Also, applying for too many cards can cause your score to dip due to hard inquiries.
Convenience: Credit cards are widely accepted and can be particularly handy for online purchases or when traveling.Complex Terms: The terms and conditions of credit card agreements can be difficult to understand, which might lead to unexpected charges.
Emergency Funding: Having a credit card can be extremely useful in case of emergencies when you need access to extra funds.Potential for Bad Financial Habits: Having easy access to credit might encourage some individuals to develop poor spending habits, leading to financial issues down the line.
Special Offers and Insurance: Some credit card issuers provide additional perks like rental car insurance, travel insurance, or exclusive access to special events.High-Interest Rates: If you carry a balance, the interest can accumulate quickly, leading to higher debt levels.

Frequently Asked Questions About Canceling a Credit Card Account

If I cancel a credit card, will the annual fee be refunded?

If you’ve already paid the annual fee and decide to close your account mid-year, whether or not you receive a refund depends on your credit card issuer’s policies. It’s always a good idea to check with your card issuer directly to understand their specific guidelines regarding annual fee refunds.

Can I perform a credit card swap to a different card with the same issuer?

Many credit card issuers allow you to switch your current card to another one within their offerings, especially if you’re looking for different benefits or lower fees. This process is typically called a product change and can be done without affecting your credit score as much as opening a new account would.

What happens to my rewards points if I cancel my credit card?

Generally, any unredeemed rewards points or cash back are forfeited when you close your account. However, policies can vary between credit card issuers, so it’s wise to redeem any outstanding rewards before you initiate the cancellation or check if they can be transferred to another account with the same issuer.

Is there a way to cancel a pending credit card application?

If your application is still pending, you might be able to cancel it by contacting the credit card issuer directly. However, if the issuer has already made a hard inquiry into your consumer report, it might not be possible to remove that from your credit history, even if the application is canceled.

Will canceling my only credit card improve my credit score?

It’s a bit counterintuitive, but canceling a card might actually temporarily lower your credit score. This is because it can increase your credit utilization ratio (the amount of credit you’re using compared to the available credit). However, if you’re closing your account to avoid debt or because it carries a high annual fee, the long-term financial benefits may outweigh the temporary dip in your score.

How long does a canceled card stay on my credit report?

Just because it’s out of your wallet doesn’t mean it’s off your report! Closed accounts in good standing can stay on your report for up to 10 years, and those with negative histories may remain for around seven years. Remember, a credit account with a positive history can actually benefit your credit score, even after it’s closed!

Can I reopen a closed account?

Missing your old card? Whether or not you can reopen a closed account depends on your credit card issuer’s policies. Some issuers may allow it within a certain timeframe, while others might require you to reapply for a new account. It never hurts to call your credit issuer and ask!

The Bottom Line on Canceling a Credit Application From CreditNinja 

It’s possible to cancel a credit card application by contacting the lender. But if it’s too late, there are still ways to work on boosting your credit rating. CreditNinja has a free personal finance blog that offers information on almost any finance topic. Check it out to increase your financial literacy. And if you ever need fast cash, consider applying for a flexible online personal loan!

References:

  1. How Many Credit Cards Should I Have? │ Time
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