Closing a credit card with a balance

We’ve taken a deep dive into four commonly asked about areas when it comes to closing a card with outstanding balance still on it.

If you’re wondering what you can do about an open credit card that’s still got balance on it, we’ve taken a start to finish look at everything from the pros and cons to alternative optio

Can you close a credit card with a balance?

Whether it’s £10 or £1,000, you can’t close a credit card account if you’ve got any outstanding balance left on it - you must clear it first.

If you want to get the ball rolling though, you can still speak to your provider and let them know you’re planning on cancelling (be prepared for them to try and twist your arm to stay!), but they’ll still keep your account open and visible on your credit report until your debt’s completely wiped.

Should I close a credit card with a balance?

If you’re thinking about shutting down a credit card, make sure you carefully consider the pros and cons first - the damage it could cause might surprise you.

Reasons to keep your credit card open

• Have access to credit in the event of an emergency.
• Keep benefiting from the really good interest rate deal you’ve got.
• Spend safely with the added protection (Section 75 of the Consumer Credit Act) that comes with buying on your plastic.
• Keep using the cashback and rewards attached to your card.
• Prevent your credit utilisation ratio from shooting up.
• Hold on to the credit-score-boosting-benefits a longstanding credit card with a good track record gives you.

Reasons to close your credit card account

• The credit limit is too tempting and you don’t trust yourself to overspend.
• Access attractive new customer deals being offered by other creditors.
• Simplify balancing several lines of credit.
• Having lots of available credit can be off-putting to other lenders

How to close a credit card with a balance

Step 1: clear any outstanding balance. The quicker you do this, the quicker you’ll be able to close your account.

Step 2: call your bank. Although a lot of credit card providers let you cancel your account online, it might be worth speaking to someone first to see if there are any outstanding fees or pending transactions that could affect your account.

Step 3: cancel any direct debits. If you’re currently paying your mobile phone contract or utility bills, for example, with the card you’re looking to cancel, make sure you re-direct them before you do.

If you don’t it could a) go down as a missed or late payment and harm your credit score, and b) cause your card to reactivate.

Step 4: make the most of any leftover rewards points. To make sure they don’t go to waste either redeem them or transfer them (if you can).

What are my other options?

If you’re certain you want to close your credit card, but you don’t have the funds to clear your outstanding balance, you’ve still got a couple of options to turn to.

1. Move your balance to a balance transfer credit card

Balance transfer credit cards allow you to move your debt from one credit card provider to another. You won’t escape your balance, but you’ll be able to move it elsewhere.

So, why do this?

Because you could transfer your debt to a card with a better interest deal and clear your credit quicker. In fact, lots of balance transfer credit cards come with 0% introductory periods, allowing you to completely waive interest rates and focus entirely on repaying what you owe.

But remember, introductory periods don’t last forever, so try to clear your balance before it expires.

Another thing to note with this option is that you’ll be charged a fee; 3% of the total amount you’re transferring.

2. Negotiate

If the reason you want to cancel your credit card is because your provider’s increasing their annual fee or offering new customers perks you don’t get - but want, get on the phone and ask them if there’s anything they can do.

If you don’t ask you don’t get, and, usually, in a bid to keep your custom they’ll be able to pull some strings to keep you on board.