woman on phone with credit card

How to cancel a credit card

author: Sarah Beresford

By Sarah Beresford

There are plenty of reasons you might want to cancel your unused credit cards, but there are a few things to consider before you make the call.

If you want to cancel a credit card, you’ll need to phone the provider first. You’ll need to pay off any outstanding balances before you close the account. Just letting a card expire or stopping using it won’t close the account – it won’t wipe out the balance either.

After you cancel, it might take a few days for the account to officially close. Keep an eye on it to make sure to check your final statement when it comes through.

If you decide to cancel your card, remember to make alternative arrangements for any recurring payments that come off the card, as well.

Can I cancel my credit card online?

Some companies may allow you to cancel your credit card online. You’ll still have to pay off the existing balance before you can use this option. It’s usually best to call up your provider and do it over the phone.

Can I pay off my balance on a different card?

You could investigate getting a balance transfer card. You might be able to find a promotional deal where you can get interest-free payments for a certain period. Balance transfers also allow you to pay off multiple bills and payments in one place, so if you have several debts then this could be useful.

However, when you transfer a balance, there’s a limit to how much you can carry over. You should also make yourself aware to check the interest rates and fees involved, to make sure it’s worth it. 

Remember, that even if you transfer your balance to a new card - your old credit card will still be active. You’ll need to cancel this through your provider as usual.

Should I cancel an unused credit card?

Cancelling an unused credit card isn’t always as straightforward as you’d think. Before you go ahead and cancel, there are few things to consider first.  

Pros

  • Cancelling a card can help you stay in control of your finances if you usually rely on credit too much and struggle with debt.
  • It also prevents the possibility of your card falling victim to fraud - unused accounts you're not keeping an eye on are often targeted by fraudsters.

Cons

  • Cancelling a credit card means you'll lose a source of credit that might be useful in emergencies. If you don't have a very healthy credit score, it could be tough to get accepted for credit again.
  • If you're using a lot of your available credit already and cancel an unused card, your credit utilisation ratio will go up.
  • If you want to cancel a card to take advantage of a new customer offer with the same lender, some companies will make you wait a fixed amount of time before you can reapply.

How will cancelling a credit card affect my score?

In the world of credit scoring, it’s good practice to keep your credit utilisation between 25% and 30%.  Using less than this might mean lenders can't build an accurate picture of how you manage credit. Using more could signal that you're relying too much on credit or are having problems paying it back.

To calculate your credit utilisation:

  1. add up the total balances owed
  2. add up the credit limits
  3. divide your entire balance by your combined credit limit
  4. multiply by 100.

So, if an unused credit card is helping to keep your credit utilisation within the recommended limits, then it’s probably worth keeping.

What happens if my credit card expires?

Your credit card is usually valid for several years after you receive it. It should work up until the last day of the month indicated on the expiry date on the front of the card. Shortly before it's due to expire, your bank will post you a new card that you can activate and start using straight away (you should destroy the old card).

When a credit card expires, you won't be able to use it anymore, but this doesn't mean the account is closed. If there’s a balance on the card, you'll have to continue making payments as usual.

An approaching expiry date is a good chance for you to decide if you want to receive a new card or whether you’d prefer to cancel the card.

How long should I wait to cancel my credit card?

You can cancel a credit card any time you like if you've cleared the balance. However, if you're trying to build a good credit history, keeping the card for at least six months and using it responsibly should improve your credit file. If you've got multiple cards, then cancelling the newest is better because keeping the oldest card open helps prove a long and stable credit history.

Read to find out how often your credit score is updated.

Disclaimer: All information and links are correct at the time of publishing.

author: Sarah Beresford

By Sarah Beresford

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woman on phone with credit card woman on phone with credit card