Can You Decline a Credit Card After Being Approved?

It is possible to decline a credit card even after receiving an approval. An approval simply means the issuer has extended an offer of credit based on your application and creditworthiness. Consumers maintain the right to accept or reject this offer, ensuring any new credit aligns with their financial strategy.

Declining an Approved Offer

Receiving an approval for a credit card application does not create an obligation to accept the credit line. While a financial institution may have evaluated your credit profile and determined you qualify for an account, the final decision to proceed rests with you. This distinction is important because the act of applying for credit, which typically results in a “hard inquiry” on your credit report, is separate from the act of opening and using the account.

However, the subsequent step of activating or utilizing the approved credit card is entirely at your discretion. Even if a physical card is mailed to you, it usually requires activation before it can be used, reinforcing your control over the account’s opening.

Common Reasons for Declining

Individuals choose to decline an approved credit card for various practical reasons. One common scenario involves receiving a more favorable offer from a different issuer, perhaps with a lower annual percentage rate (APR) or better rewards. For instance, a different card might offer a significantly lower promotional rate or a more attractive ongoing APR. Some cards might also come with an annual fee, and a consumer might decide the benefits do not justify this cost.

Another reason might be a change in financial circumstances since the application was submitted, leading to a realization that additional credit is no longer needed or desired. An applicant might also decide they want to avoid accumulating too many credit lines, which could complicate financial management or potentially lead to overspending. Sometimes, upon reviewing the card’s specific terms and conditions, an applicant may find them less attractive than initially perceived, such as discovering a higher cash advance APR or a restrictive rewards redemption policy.

Steps to Decline or Cancel

The process for declining or canceling an approved credit card varies slightly depending on whether the card has been received or activated. If you have been approved but the physical card has not yet arrived or has arrived but remains unactivated, you should contact the credit card issuer directly. Inform them of your decision to decline the offer and request that the account not be opened.

If you have received the card but have not activated it, refrain from activating it and contact the issuer to formally close the account before any transactions occur. It is also advisable to securely destroy the physical card to prevent unauthorized use. This can involve cutting through the EMV chip and magnetic stripe, or using a cross-cut shredder designed for credit cards. For metal cards, contacting the issuer for secure disposal is often recommended.

In the event the card has already been received and activated, the action is considered a cancellation rather than a decline. To cancel an active card, you must contact the issuer’s customer service. Before calling, ensure any outstanding balance is paid off, and consider transferring any automatic payments linked to that card to another account. During the call, confirm the account balance is zero and request a confirmation number or written statement verifying the account’s closure.

Understanding the Credit Score Impact

Declining an approved credit card has specific implications for your credit score. The initial hard inquiry, which occurs when you apply for the credit, will remain on your credit report regardless of whether you accept the card. A single hard inquiry results in a minor decrease of about five points to your FICO Score. It remains on your report for up to two years, though its impact lessens after 12 months. Declining the card after the inquiry means no new account is added to your credit history, which prevents any potential positive impact a new, responsibly managed credit line could have had on your credit utilization or average age of accounts.

Canceling an activated credit card can have a more nuanced effect on your credit score. If the canceled card was one of your oldest accounts, it could slightly reduce the average age of your credit accounts, which is a factor in credit scoring models. Additionally, if canceling the card significantly reduces your total available credit, it could increase your credit utilization ratio (the amount of credit you are using compared to your total available credit), potentially lowering your score. Financial advisors often suggest keeping utilization below 30% to maintain a healthy credit profile.

Allowing an approved card to remain active but unused also carries considerations. While an unused card contributes to your total available credit, which can positively impact your utilization ratio, issuers may close accounts due to inactivity over time. If an issuer closes an unused account, it can have a similar effect to voluntarily canceling a card, potentially impacting your average age of accounts and utilization depending on your overall credit profile.