How to cancel a credit card
If you want to cancel your credit card, you first need to bring your account balance to £0 (including no pending transactions), re-route any automatic payments, and redeem any rewards. Once you've done that, you're ready to contact your credit card issuer. For more details, follow the step-by-step guide below.
Step 1: Pay off any remaining balance
You can’t cancel a card if you still owe money. Either pay in full or transfer the balance to another card. If you have surplus credit remaining, you may need to request a refund via your card issuer's customer service team before you can start the account closure process.
Step 2: Be sure you want to cancel it
If your credit card doesn't charge you annual fees, it may be worth keeping it open (but unused) so that your credit utilisation percentage doesn't go up. Plus, if it's an old account, closing the card may reduce your credit history. Both of these factors can impact your credit score. More on this below.
On the other hand, if having it open tempts you to spend money you can't afford to, it can be beneficial to cancel regardless.
Step 3: Redeem any rewards
If your credit card offers cashback or points, try and use them before closing the account. Use them or lose them!
Step 4: Contact your card provider
Call or send a secure message to your credit card provider to request cancellation. Your provider may offer you a deal or incentive to keep you as a customer, so stay firm and politely decline if you still wish to cancel. Some lenders may ask for a written request to complete the process.
At Zable, you can close your account through the Zable app.
Step 5: Request written confirmation
Ask for a written confirmation that your account is closed to avoid unexpected charges.
Step 6: Check your credit report
After cancellation, review your credit report to ensure the card is marked as 'closed'. This may take a few weeks.
Step 7: Cut up your card
When you dispose of your credit card, cut through the chip and magnetic strip to prevent unauthorized use. However, retain any documentation for your records.
Does cancelling a credit card hurt your credit score?
Cancelling your credit card can lower your credit score for two reasons:
It may reduce your credit history: Older accounts help build a strong credit history, so closing an old card may shorten your history.
It increases your credit utilisation percentage: If you cancel a card, your total credit limit decreases. In turn, your credit utilisation percentage goes up, which can hurt your score. Let's look at an example, where you have two credit cards and decide to close one:
Card A has a £5,000 limit
Card B has a £3,000 limit
So your total credit limit is £8,000 (£5,000 + £3,000).
If you owe, say, £2,000 in total, your credit utilisation is 25% (£2,000/£8,000).
If you cancel Card B, your total available credit drops to £5,000, so your utilisation rises to 40% (£2,000/£5,000).
This higher utilisation rate can then negatively impact your credit score.
Ultimately, cancelling a credit card should be done thoughtfully to avoid harming your credit score. If you’re unsure, consider keeping the card open but inactive to maintain your credit history and keep your credit utilisation low.
For more information, check out this guide on how to improve your score.
Tips for inactive credit cards
If you choose to keep your credit card open but inactive, be sure to follow these tips:
Check for annual fees: Some premium cards charge a fee. Check if this is the case before deciding to keep it open.
Keep an eye on your account: Keep the card provider's app on your phone and continue to check your statements. This helps ensure you don't fall victim to fraudsters who may assume that fraudulent activity on an inactive account may go unnoticed.
Update your address: If you move, update your address for the inactive card. If a replacement card is sent to your old address, it could be a security risk.
This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.