How to cancel a credit card

Key takeaways

• Cancelling a credit card is an important decision, and several factors come into play

• Settle any outstanding debts before cancelling your card to avoid further interest

• Closing a card increases your credit utilisation ratio – the proportion of available credit you’re using

• Consider balance transfer credit cards to settle outstanding balances

Credit cards can be a useful financial tool that help you manage your money. They can be handy for 0% interest purchases, clearing debt faster, earning rewards and building up a strong credit history.

However, there may be a time where you want to cancel your credit card, so we’ll walk you through the cancellation process and look at whether it’s a good idea – or not.

How to cancel a credit card

1. Pay off your outstanding balance: Settle any outstanding debts on the card to avoid continued interest charges

2. Claim any rewards: If you’ve built up loyalty points on the card, now is the time to spend them. You may not be able to redeem points after the card is cancelled

3. Cancel regular payments: Make sure you stop any ongoing subscriptions or direct debits linked to the card

4. Contact your provider: Initiate the cancellation by calling the number on the card or using online services provided by the credit card company

5. Send a follow-up email: Document the account closure in writing to have a record of your request.

6. Check your credit report: Your credit file shows your active credit cards and your credit history, so check to make sure your credit card has been cancelled. It can take up to seven weeks for changes to show up on your credit report

7. Cut up your card: Once you have completed the earlier steps, destroy your card to prevent any fraudulent use

Should I close unused credit cards?

Cancelling a credit card isn't a decision to be taken lightly. It can come down to several factors, such as:

• Lack of use: If a card is gathering dust, it might be time to let it go

• Better options:  You might be able to find a better deal. A card with more attractive interest rates, no annual fees and better rewards, for example

• Avoiding temptation: If having too much available credit leads to overspending, cancelling a card might help you avoid slipping into debt

• Security concerns: In instances of loss, theft, or compromised information, cancelling your card is a vital step in fraud prevention

• Struggling to keep up with payments: If you're finding it hard to pay your credit card bills on time, closing your account removes the risk of missing payments that will incur charges and hurt your credit score

• Dissatisfied with your provider: You may not feel you are treated well by your credit card company. You might not be impressed by their customer service, for example

Does closing a credit card affect my credit score?

Unless you replace it with another line of credit, cancelling the card will reduce your available credit – in turn increasing your credit utilisation ratio. This might act as a red flag for some lenders.

Further reading: What is a credit utilisation ratio?

However, if you’re concerned you might overspend on the card and struggle to clear the balance, this could have a far more negative effect on your credit rating. In this case, cancelling before you run into financial difficulty would be the best option.

What are the pros and cons of cancelling a credit card?

While you might be able to cancel your credit card at any time, is it the right choice to make? There are pros and cons to the decision, such as

Advantages

• Simplifies finances: Managing fewer accounts can make budgeting more straightforward

• Reduces fraud chances: With fewer cards, your exposure to potential scams decreases

• Negotiation power: Informing your credit card company of your intent to cancel might lead to better terms

• New opportunities: You might be able to take advantage of introductory offers from other banks

Disadvantages

• Credit score impact: Your credit utilisation ratio could go up, potentially harming your credit score

• Loss of emergency funds: Cancelling could mean losing a quick source of credit in urgent situations

• Risk of losing favourable terms: Ensure you're not cancelling a card that gives you financial benefits you won’t find elsewhere

What options do I have if I’m struggling with credit card debt?

If you’re struggling with credit card debt, you can’t just cancel the card and hope it will all go away. But there are steps you can take to clear the debt more quickly. These include:

• Moving your balance to a balance transfer credit card: This allows you to move your existing credit card debt to a new card with a lower or 0% interest rate for a promotional period. This can reduce the amount you pay in interest, helping you pay off your debt faster. Be mindful of any transfer fees and ensure you can clear the balance before the promotional period ends.

• For larger debts, consider a loan: Debt consolidation loans can roll up your debts into one manageable monthly payment, often at a lower interest rate. Loans shouldn't be taken out lightly, and a debt consolidation loan only works if you stop spending on credit.

• Authorised overdraft: If the interest rate is lower than your credit card, it might be a short-term option to pay off your credit card. However, overdraft limits can be smaller than other options, interest can still apply and they are not guaranteed so could be withdrawn.

• Negotiating with creditors. Many credit card providers are willing to negotiate repayment plans if you are struggling to make payments. You could ask for reduced interest rates or extended payment terms.

• Debt help and advice services. Reaching out to charities and organisations like Citizens Advice,

  StepChange, or National Debtline can provide free, impartial guidance. They can help you explore debt management plans (DMPs), individual voluntary arrangements (IVAs), or even bankruptcy in severe cases.

Other useful guides

For more information on credit card management and security, explore our comprehensive guides:

• How to use a credit card to improve your credit score

• Guide to credit card protection

• How many credit cards can you have?

• Pros and cons of credit cards

Finding the right credit card for you

When the time comes to replace your old credit card, you can compare credit cards using our comparison service.

It's tailored to your personal and financial situation, and using our eligibility checker won't affect your credit score.

We highlight the important information such as rates, transfer and annual fees to help you make the best choice before you click through to the card provider to apply.

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.