11.4 Cancelling a credit card

This section will talk you through how to cancel old credit cards that you no longer use.

If you decide you want to cancel a credit card you will need to go about it in such a way that it doesn’t have a negative impact on your credit report.

Before thinking about cancelling a credit card, you will first need to ensure that the balance on the card you wish to cancel has been paid off in full. NEVER try to cancel a credit card while you are paying off the balance.

If you have a balance on the card but want to cancel it, you will need to use your self-discipline and stop using the card while you are working towards paying off the balance.

What will I gain by cancelling a credit card?

If you cancel a credit card, in the right way, you stand to benefit in two ways, both of which are related to how well you will be able to access future ‘best deals’ in the marketplace.

Firstly, when you cancel any credit agreement you will obviously have access to less credit. This will work in your favour when you try to apply for future credit facilities.

Your credit score will be reduced if you have access to large amounts of unused credit therefore by cancelling a card you will reduce the amount of credit you have access to and it will boost your credit score.

Secondly, you will find that the best credit card deals are only available to new customers. If you cancel a credit card you should return to ‘new customer’ status after around 18 months and should then be able to start to benefit from new customer offers. It is important to note here that the final decision is down to the credit card provider as it will be under no obligation to offer you new customer deals twice.

Choosing which credit card to keep

If you have several credit cards that you no longer use, you may decide to keep one of them for use in an emergency. Any offers running on these old cards will probably have expired months ago and so the only thing you probably need to consider is which one has the lowest interest rate.

Another way to approach this would be to ring round each of the credit card companies and see what each is willing to offer you when you say you want to cancel, then keep the one which offers you the best deal for your individual needs and circumstances.

When not to cancel a credit card

There are times when it is actually better not to cancel a credit card; when it will do more harm than good to your credit report.

This is most likely to occur if you have missed a payment on the credit account within the last 3 years.

If this is the case, DO NOT close the credit account and wait until the missed payment drops off your credit report.

If you do not follow this procedure the missed payment will stay on your credit report for a further SIX years.

Back to Guide to Credit Cards Contents

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