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Cancel a credit card

How to cancel a credit card

Victoria Russell
Written by  Victoria Russell
Donna McConnell
Reviewed by  Donna McConnell
5 min read
Updated: 31 Jan 2024

If you’re no longer using a credit card, you might think it’s sensible to cancel it. But how do you go about it and is it a good idea?

Navigating the world of credit cards can be as daunting as it is necessary. With a plethora of options at your disposal, each with its own set of rates, rewards, and terms, it's not unusual to find yourself wondering whether to cancel a credit card. But when is the right time, and what are the implications of such a decision? 

Reasons to consider cancelling a credit card 

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 may have found a card with more attractive rates and rewards. 

  • Temptation control: If having too much available credit leads to overspending, cancelling a card can help manage your finances. 

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

Woman using a laptop

The cancellation process explained 

If you've weighed your options and decided to cancel, follow these steps to ensure a smooth process: 

Pay off your balance 

Settle any outstanding debts on the card to avoid continued interest accrual. 

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. 

Cancel regular payments 

Make sure you stop any ongoing subscriptions or direct debits linked to the card. 

Contact your provider 

Initiate the cancellation by calling the number on the card or using online services provided by your bank. 

Send a follow-up email 

Document the account closure in writing to have a record of your request. 

Check your credit report 

To make sure your card has been cancelled, check your credit report. It can take up to seven weeks for changes to show up on your credit report. 

Cut up your card 

Once all is said and done, destroy your card to prevent any fraudulent use. 

Weighing up the pros and cons 

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 provider 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 benefits you the most. 

Understanding credit utilisation 

Credit utilisation is a financial term which refers to how much borrowing you have as a percentage of your total lines of credit – or your credit limit. For example, if you had two credit cards each with a £2,000 credit limit and you had a debit balance of £1,000 on one card, your credit utilisation would be 25%. But if you then cancelled the unused card, you would change your credit utilisation to 50% – and this could dent your credit rating. Generally, lenders prefer you to have a lower credit utilisation ratio as it is a marker of financial stability. 

The impact on your credit score 

Cancelling a credit card could have an impact on your credit score. It's a balancing act; closing a card reduces your total available credit, which can increase your credit utilisation ratio – a red flag for lenders that could lead to a lower credit score. 

Addressing a stolen card 

In the unfortunate event that your card is stolen, act swiftly. Immediately contact the credit card provider to block the card and limit your liability. You're often only liable for a minimal amount of any unauthorised transactions if you report the theft promptly and haven't been negligent. 

Exploring alternatives

If you're struggling to clear the outstanding balance, consider transferring your debt to a balance transfer credit card. These cards offer a low or zero interest rate for a period, giving you time to settle your debt, though they usually come with a transfer fee. 

Additional resources 

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

Finding the right 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.  Deciding to cancel a credit card is a personal decision that can have financial ramifications. It's essential to consider your circumstances, financial habits, and the potential impact on your credit score. Armed with the right knowledge and strategies, you can make the choice that best aligns with your financial goals. Remember, MoneySuperMarket is here not just to guide you through these decisions but also to help you find the credit card that fits your life. 

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.

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