Cancelling a credit card without hurting your credit score
Updated on Thursday 17 August 2023
If you’ve got a bulging wallet or purse crammed full of rarely used credit or store cards, you may be on the cusp of cancelling a credit card or two.
And if you have a credit card account open that you haven’t used for several months or even years, it’s clearly a good idea to close a dormant account to reduce the risk of fraud.
However, if you’re quite rightly wondering “will cancelling my credit card affect my credit score?” then you’ve come to the right place to find out.
Our step-by-step guide tells you how to safely go about closing a credit card account, what checks need to be made and the pros and cons of cancelling a credit card, including the potential impact on your credit score.
How do I cancel a credit card? (steps on how to do it)
Here are our seven key steps on how to securely and carefully cancel your credit card without damaging your credit rating.
Step 1: Check your credit card utilisation ratio
Having unused credit recorded on your credit file typically means you will have a healthy credit utilisation rate. This is because potential lenders will see that despite you having plenty of credit available to use, you are disciplined and responsible enough NOT to use it all for the sake of it.
A low credit utilisation speaks volumes to a lender as it’s a clear indicator that you are not desperate for money.
Also, unused credit has a profoundly positive effect on your credit score and your eligibility to borrow money, very often at lower interest rates.
For this reason, you should carefully check your credit utilisation percentage before cancelling a card as doing so could make you have a high/er utilisation, damage your score and your ability to borrow money.
Ideally, you should avoid using more than 30% of the credit you have available.
Read more: What is credit card utilisation?
Step 2: Choose a credit card account with a nil or low balance
In order to close a credit card account, you will need a nil balance. It obviously makes complete sense to choose to close an account with a zero balance or with the smallest sum of borrowing on it and pay the balance off.
You might be interested in: How many credit cards should I have?
Step 3: Redeem rewards on any rewards cards
Don’t lose the rewards that you’ve earned and avoid cancelling a card if you’re only a few more points away from a milestone reward.
Step 4: Contact your credit provider to cancel
After following steps 1 to 3, if you conclude it’s a good idea to proceed with cancelling your card, then do so by contacting your credit card provider to check that you have a zero balance and ask them to close your account. Their customer service line will very often be printed on the reverse of your credit card so check if this is the case before cutting up or shredding your credit card.
Step 5: Don’t be bamboozled into accepting their offers
Very often you’re forced to speak directly to your credit card provider in order to cancel a credit card although you can let some providers know online. As is very often the case these days, they won’t let you go without a fight! But unless what they’re offering you is a better deal than you have with an existing card provider, stand firm and be assertive, politely decline their offers and get that card cancelled!
Step 6: Confirm your account closure in writing
To tie up any loose ends and to ensure your credit card is cancelled, confirm your account closure in writing by registered mail (or by email if they acknowledge receipt). Because if you don’t make sure your account is closed and move address, someone else could easily start to use a card in your name if they’re criminally minded to do so.
Read more: How to fix your credit after being scammed
Step 7: Check your credit report shows the account as closed
Once you’ve sensibly followed steps 1 to 6 above, to make absolutely certain that your credit card account is closed, you should order a free copy of your credit report several weeks later to check your credit card account is marked as ‘closed’. If it isn’t, consider using the free resolver.co.uk service to complain to your old card provider that despite you requesting an account closure, they still haven’t proceeded to close your account. Using this service should make them jump to attention and get the job done!
Note: As there are three main credit reference agencies in the UK and your credit card could be active and shown on one or more credit files, you should order a multi-agency credit report so that you can check all three at once.
You can get a free, multi-agency report with checkmyfile.com by tapping the button below. Sign up now for a 30-day free trial and cancel anytime (there is a £14.99 monthly fee after the trial):