When you have a credit card you don’t use, canceling it might seem like an obvious move. That’s especially true if the card carries an annual fee or you’re prone to overspending. But if you aren’t careful, getting rid of a card can have unexpected consequences, like a ding to your credit score.

That’s because credit bureaus look closely at how much credit you have access to, and axing one of your cards can significantly reduce this amount. Luckily there are ways to lessen the damage or even avoid it altogether. Here are five simple steps to cancelling a credit card—the right way.

It’s possible to close a credit card if you still have a balance on it. You’ll still owe the money, but will no longer have access to draw from the credit card. For that reason, it’s usually best to pay off the balance in full before you cancel. This will ensure the account will appear on your credit reports as “paid as agreed.”

If the balance is too high, consider transferring it. Currently, the best balance transfer cards offer up to 21 months of no interest on transferred balances. Note that this type of card usually requires good or excellent credit. You’ll also pay a balance transfer fee—generally between 2% and 5% of the total amount transferred.

Does it ever make sense to cancel before fully paying off your card? It might if you’re the type of person who would benefit from taking away the temptation to rack up more spending as you pay down what you owe, says Kenneth Chavis IV, a financial planner at wealth management firm LourdMurray in Los Angeles. “This is a behavioral debt management strategy,” he explains.

Points and miles from co-branded hotel and airline credit cards will stay in your rewards program account even when you cancel the card. However, that’s not the case with general rewards cards like the Chase Sapphire Preferred or the American Express Gold. You’ll need to spend or transfer these rewards to avoid losing them. 

You can typically transfer your points to the issuer’s airline or hotel partner. Keep in mind that transfer times can vary widely. While most programs allow for instant transfers, others may take up to 14 business days to move your rewards.

Call your bank or get in touch through their online message center and let them know you want to close your credit card. Make sure to ask for written confirmation of your closed account status and $0 remaining balance. This way, you’ll have proof in case the bank doesn’t report the account closure to credit bureaus correctly.

The bank isn’t likely to report your closed account right away. Give it four to six weeks and check your credit report to ensure the account is marked as closed at your request and paid as agreed. Contact your credit card issuer if it isn’t and file a dispute with credit bureaus if the bank doesn’t correct the error. Note that correcting an error with one credit bureau might not impact your credit reports with other bureaus. For that reason, it’s best to go through the dispute process with each bureau separately. 

You can destroy a plastic credit card using scissors or a shredder. If you have a metal credit card, return it by mail to the credit card issuer—your bank can send you a prepaid envelope at your request. Alternatively, you can simply return the card to a local bank branch.

According to popular credit advice, canceling a credit card is a bad idea since it can hurt your credit. Closing a card may negatively impact your credit utilization—the second most important credit factor after payment history. A credit utilization ratio is the percentage of the available credit you use. You want to keep that number under 30% to avoid losing credit score points. 

Say, you have two credit cards with a $2,000 credit limit and a total of $500 in credit card debt. Your credit utilization ratio is 25%. If you close one card but your balance stays the same, the ratio will jump to 50%. In this scenario, your credit will likely sustain some damage.

Luckily, there are ways to mitigate that damage, according to Beverly Harzog, author of five books about credit and personal finance. First, if you have another credit card, you can try to request a credit limit increase to make up for the loss of available credit.

However, it’s best to only do that if you’re in good standing on your card to avoid the opposite result: It’s possible a credit card issuer could review your case and decide to slash your credit limit instead. “I always say don’t call attention to yourself if you can’t withstand the scrutiny,” Harzog warns. “If you’ve had a sloppy payment history—don’t try that.”

If you’ve canceled a card because it didn’t fit your spending habits, you can also apply for another one that does. If you get a similar or higher credit limit, you might mitigate any reduction in your credit score. If you are in the market for a new card, check out Buy Side’s picks for the best cash back and best travel credit cards—two of the most popular categories. 

You can cancel a credit card at any time. If you’ve applied and soon realized the card isn’t right for you, you can close the account. Keep in mind, however, that a credit card application triggers a hard inquiry on your credit report, which can cost you some credit points. The inquiry stays on your credit for two years and impacts your scores for one year, whether you close the card or not.

If you open a card only to get a sign-up bonus and cancel it after you get and spend the rewards, that’s a practice known as “credit card churning.” While not illegal, it can take a toll on your credit if you churn frequently due to all the hard inquiries. 

Plus, lenders also notice this kind of behavior and may become skeptical when you apply for more credit, says Yanely Espinal, director of educational outreach at Next Gen Personal Finance, a nonprofit providing personal finance curriculum to middle- and high-school teachers.

“It makes them think that maybe your financial reputation is not so strong because you’re borrowing money from so many different people at the same time,” she notes.

How many credit cards you keep depends on your shopping habits—and your willingness to play the points game. There may be valid reasons to get rid ofl a credit card, but it’s a good idea to consider alternative solutions first. 

For instance, if the card doesn’t offer enough value for your spending, you can call the credit card issuer and ask for a product change. This means that you’ll get a different credit card but keep the same account and credit limit. 

Issuers have different rules for product changes but it doesn’t hurt to explore your options before you decide to close your credit card account. For example, Bank of America is rather flexible with product change rules. Say, you’re not traveling enough to justify paying $95 per year for the Bank of America® Premium Rewards® Credit Card. You may be able to switch to a no-annual fee cash back card like the Bank of America Unlimited Cash Rewards. Chase, on the other hand, is more strict and only allows product changes within the same card family.

If you struggle with overspending, it may be good for your financial well-being to get rid of your credit card. Still, there are other options.

See if you can lock your card from your online account or mobile app, Espinal suggests. This stops any new charges while still allowing previously authorized and recurring charges. 

A card lock helped Espinal pay down the balance on one of her cards while avoiding adding to it. “And then I was out having drinks with a friend of mine and I went to try to use the credit card,” she says. “It was a little embarrassing…I totally forgot that I locked it, but it was a good thing because if I didn’t intend to spend with that card, that would have been a great way to help me with my self-control.”

These are the accounts that offer the best interest rates—without burdensome fees, gimmicks or other hassles

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