How to safely cancel your credit card without damaging your score - A step by step guide

Cutting up an old credit card

The decision to close a credit card account isn’t one that should be taken lightly and it’s important to be aware of the associated risks of closing one before you commit to doing so. 

When it comes to cancelling credit cards, there are a few dos and don’ts you should be aware of so that you don’t damage your credit score. In our guide below, we talk you through how to cancel your credit card safely without it having too much of an impact on your credit rating or credit score.

Will my credit score be affected if I cancel my credit card?

Cancelling your credit card will almost certainly have an effect on your credit score and while it might seem counterintuitive, by no longer having a credit card, you could negatively impact your credit score.

However, there are some ways that you can cancel your credit card without it having too much of an effect on your credit score. Take a look at our step-by-step guide in the section below on how to cancel your credit card safely without it damaging your rating.

The advantages and disadvantages of cancelling a credit card

When thinking about whether to cancel your credit card, you should think about the pros and cons of doing so first to ensure that you make the right decision.

Pros

  • You won’t be tempted to keep using the credit card, which could result in you getting into debt if you keep spending more money than you’re able to pay back.
  • Most credit cards come with an annual fee, so if you’re not using yours, but still paying the annual fee, it will just be a waste of money.
  • If you cancel your credit card, it means that you’ll have one less card to keep track of and you won’t risk forgetting about it altogether.

Cons

  • You could end up risking your credit utilisation ratio which is the amount of credit you have used relative to the credit you have available. If you cancel a credit card that still has a lot of credit available, it could result in a higher credit utilisation ratio which could cause damage to your credit score.
  • If your credit card provider offers them, you’ll miss out on other perks of having a credit card such as airline miles or discounts on certain items.
  • By cancelling your card, you’ll be reducing the average age of your credit history; the longer you have lines of credit open such as a credit card, the older your credit history which will put you in a better position when it comes to obtaining other types of credit such as a mortgage or car finance. 

Is it better to cancel unused credit cards or keep them?

In almost all circumstances, it’s usually best to keep any unused credit cards open, even if you don’t use them and they’re inactive. You should try and wait until your credit card expires and the balance is at zero and then you can cancel so that your credit score isn’t affected.

Can I cancel a credit card that I just applied for?

If you apply for a credit card and get approved, but decide that you want to cancel it, you can only swap the card to another one offered by the same provider; you can’t usually cancel it straight away without any consequences.

Cancelling a new credit card straight away will more than likely have a negative impact on your credit score.

How do I cancel a credit card - A step by step guide

Below, you’ll find a detailed step-by-step guide on how to cancel your credit card without damaging your credit score.

1. Consider whether cancelling your credit card will have an effect on your everyday life

If you rely on your credit card for everyday purchases, it’s a good idea to think about whether your spending habits will be affected if you cancel your card and if it will be in a positive or negative way.

2. Think about how your credit might be affected

When it comes to the factors that influence your credit score, there are seven main things that have an impact, both in positive and negative ways:

  • Your payment history
  • Your credit limit
  • How long you’ve been registered on the electoral roll
  • The age of your credit (credit history)
  • Whether you have a mortgage
  • Your credit utilisation
  • Your historic utilisation

Before cancelling your card, it’s a good idea to consider the potential impact that it could have on your credit score and whether it would be worth cancelling.

3. Think about the alternatives of cancelling your card

Instead of making your mind up about cancelling your card straight away, consider some of your other options as well such as hiding your card away in a drawer so you’re not tempted to use it or see if you can swap to a balance transfer card or another type of loan that might be better suited to you.

You might like: 9 different ways to borrow money

4. Cancel your card

If you have decided that cancelling your credit card is the right decision for you, make sure you carry out the following steps to minimise the risk of damaging your score:

  • Pay off any remaining balance on the card.
  • Cancel any recurring credit card payments that you have. For example, if you have your credit card as your form of payment for your mobile phone contract, make sure you switch it over to another card.
  • See if there are any rewards you need to redeem from your credit card provider, such as air miles, for example.
  • Call your credit provider or log into your provider’s website to see if you can cancel online and then following the appropriate steps and protocol.
  • Follow up with your card provider in writing via a letter or email to double-check that it’s definitely cancelled.
  • Double-check your credit report to make sure that it’s been closed.
  • Cut your credit card up.

Related guides