How to Cancel a Credit Card and Why Maybe You Shouldn’t.

While this varies slightly by card provider and country, a meta-analysis of the major authorities in this area concludes that you should 1st pay off any outstanding balance and 2nd call or get in touch with the providers customer service line to cancel the card.

Before you do that however – you might want to consider the fact that you could be better off keeping it open.

There is some as yet inconclusive debate about the impact that cancelling a card can have on your credit score, and whilst this does depend heavily on your individual circumstances and the providers themselves, the general consensus is that  that cancelling a credit card will impact your credit score one way or another.

If you have decided that you want to cancel and really don’t care about your score – simply pay off or transfer the outstanding balance, redirect any regular payments and call the credit card company (see our process here).

Cutting up the card into tiny little pieces might be amazingly cathartic – but it won’t actually do anything other than stop you from spending on it so save that ‘till the end.

If you do care about your score and are still weighing up your options – I invite you to read on.

Do unused credit cards affect my credit rating?

Remember that your credit score is just a way for lenders to judge whether or not you would make a good customer for them. They do not like risk so if they see that you are staying well within your credit limit, never miss any payments and occasionally pay a chunk off some balances – then they like you.

For example:

If you have 5 credit cards with a combined credit limit of $10k – you regularly use 2 or 3 of them but never exceed 70% of your available credit (in this case $7k) and you always pay them off on time, then congratulations – you look like a very good customer.

If however you cancel one of the cards that you are not using, which lets say had an available limit of $2k, this would reduce your overall available credit to $8k.

Now that same $7k balance that you owe on the other cards means that you are using a massive 88% of your overall available credit and suddenly you look like a high-risk client!

This sentiment is echoed in articles from CNBC, Experian and to name but a few so it’s a relatively universally accepted rule and is absolutely something that you need to consider.


Your situation could be very different to this simplistic example so we need to consider WHY you want to cancel the card in the first place and what options you might have.

Below are a list of common reasons (according to google!) why you might want to cancel a credit card and a the options you could have open to you in each of them.

I think I have too many cards

How many is too many? Even Experian agree that this depends on your individual circumstances and essentially comes down to the amount of debt that you can reasonably service.

If you owe $60 over 12 credit cards but that’s only 50% of your available credit, you earn $200k per year and can easily pay for them all, then from a credit score point of view you are still a good customer.

On an individual level there might be some spending issues to address but that is a topic for another article! (see shopaholic)

If however most of these credit cards are sitting around empty, maybe even attracting annual fees and potentially increasing the risk of fraudulent activity, then it might be time for a cull.

In this situation, stay aware of the 70% debt to credit usage ratio guide described above and be methodical in your approach to cancelling each card. See our recommended process HERE.

I need to cancel a joint credit card account

For whatever reason, be it divorce, separation, death or just a loss of trust, many of us find ourselves at some point in our lives, needing to financially sperate from someone else.

Many of the same considerations listed above apply here though you might also need to consider a legal financial separation so that you do not become liable for their financial missteps in the future.

I would personally strongly recommend investigating the process for this in your country as I have personally been a little too forgiving on financial issues in the past and it did not turn out well for me.

Get all your information together and call the credit card company, they will be able to tell you the exact steps to take as you may need to get a signature from the other party in order to close the account and you will need to stay on top of the entire process until you get a final written confirmation.

The card provider might offer you a personal card to replace the joint one which could be a good solution for you depending on your situation.

Please be ready for their offers and know what is available to you elsewhere before you pick up the phone (or open the chat) so that you don’t just jump at their first proposal without doing your homework.

My card charges an annual fee

If this is an unused card then it’s probably not worth keeping it.

However, you might want to consider if there are any benefits to this card such as travel points, insurance discounts or cashback that you are not taking advantage of.

If there are then you could potentially use this one instead of one of your others that you maybe use for fuel and food purchases and start to collect rewards that OUTWEIGH the charges.

Additionally, when you call to cancel this card they might offer you a fee free version or a 0% transfer.

As you will have done your due diligence on what you want out of this call with the provider, when they make you an offer be sure to consider the following points:

  1. Will my credit score thank me for this new card, credit limit and potential balance?
  2. Is it really a special offer or can I get better elsewhere?
  3. Do I actually want this new offer or do I just want to cancel the card?

Be sure to consider how you are balancing your debt and your credit balances and if you are using what you have to its best advantage

I want to get new customer discounts and offers

This is a fair point.

New customers get all the good stuff don’t they?

In my personal experience I have cancelled cards in the past and within 12 months I was getting some of the best fee free 0% offers on the market from that same provider!

This of course is not always the case and there are many situations where you can just call your provider and ask for the new customer deals, if they say no, then cancel the card as you would have done anyway.

Follow our detailed cancelation process HERE and be sure to get confirmation of cancellation.

You might need to leave it for quite a while before you reapply so try asking them what the time limit is before reapplication when you call to cancel.

0% credit

My card has been misused or I suspect fraud

If you suspect fraud, contact the card issuer immediately – they usually have a special number for this and then look up the actions you need to take in your country to protect yourself and possibly even claim back any losses.

Personally, I would cancel the card immediately and change ALL my passwords that could be potentially linked to it.

Check out Experian as they have a “dark web” checker for stollen passwords that I found fascinating!

I cannot stop spending

If cutting up or hiding your card is not going to stop your spending compulsions, then cancelation might be your best option.

Please do consider addition support though. Compulsive spending is no laughing matter and whilst shopaholics anonymous is not a certified organisation as far as I am aware, there are so many support groups and specialist counselling services that can help you to address the addiction and get your life back on track.

Advantages to cancelling a credit card

  • It can be mentally freeing to be without credit cards – or at least have less of them. Despite the argument for keeping them open, if you “Feel” better with them gone out of your life then do it.
  • Less temptation to spend
  • Depending on your situation it can have a positive impact on your credit score (see HERE)
  • It can open you up to better NEW customer offers in the future.
  • Reduced risk of fraud
  • Less “stuff” to keep track of
  • Dave Ramsey is very anti credit cards and whilst I don’t always agree with him, his methods might be just what you need to read right now, take a look HERE.

Disadvantages of cancelling a credit card

  • You could be missing out on great deals from your credit card provider if you take the time to negotiate with them. This could help you pay off more expensive debts or invest in something that gets you a higher rate of return.
  • It could negatively impact your credit score and thus make it harder to get good deals on credit cards, loans or mortgages in the future.
  • You have less “wiggle room”. Whilst none of us like to think that we will not be able to pay for general living expenses at any point in our lives – things happen. Health crises, pandemics, job losses etc. Having a little bit of financial back up, so long as it’s costing you nothing to keep it alive, could save your bacon at some point in the future!


The Process

CNBC Select explains the six steps you should follow if you want to cancel a credit card but we have expanded this a little to 10 steps to make sure that all your decision bases are covered too.

1.      Decide which one and why

Research the positives and negatives for you in your individual circumstance and go with that.

Everyone has their own thoughts and opinions on this subject (and if asked they do love to give them to you) but ultimately, it’s your money, your life and your credit score so make your choice and go with it.

2.      Pay Your Debts

Before cancelling the credit card, make sure there’s no debt balances left on the card.

If you have a balance remaining, you might be able to advise the credit card provider that you wish to cancel the card, you might even be able to ask them to stop all transactions, but you cannot cancel it whilst there is an outstanding balance remaining on the account.

If you cannot pay the balance off in full, either wait until you can, negotiate a better rate with the provider (& keep the card open) or look for some 0% credit cards with low transfer fees or good personal loans to shift the debt over to. Check out our debt action plan if this is something you need help with.

There are a number of ways to “shuffle” your debts around to pay the least in interest – check out this for more information on that.

3.      Redeem Remaining Offers

Many cards offer a raft of rewards and special discounts which can get lost and forgotten about in the piles of promotional emails and letters that you get from them so dig though the web site or just call up the customer service desk and ask what rewards are sitting around unclaimed on your card.

See if you can transfer any of these points or offers into vouchers before you cancel so that you don’t lose them entirely.

4.      Call Your Credit Card Issuer

Be prepared!

Make sure you have the contact details for the correct department. A standard google search or the providers web site should provide you with that.

Have your script ready and expect to be kept on hold, transferred, and cut off a few times before you get through to the right person who can provide you with what you want. If you get through to a helpful adviser on the first try, then it’s a bonus!

If there is an opportunity to write, email or live chat with them – this could be a better option, but you will need to stay on top of the responses and be clear that your requirements have been met.

5.      Credit Card Provider Script

Ramit Sethi, author of “I will teach you to be rich” has some great scripts for conversations with credit card providers which you can find here.

In essence, the idea of having a script is to mitigate for any unwanted outcomes.

You know that there is a chance that the representatives from the card providers will try to persuade you to stay with them, take on more credit or in any way sign up for something that you don’t want, but having a script can help you bat away these unwanted advances easily.

Scripts are also useful when they stop you from over sharing!

If you are having a few financial issues and / or just want to cancel your cards so that you reduce the temptation to spend on them – this could be seen as a red flag and noted down as high risk behaviour.

A good friend of mine once asked if she could reduce her credit limit so that she didn’t spend as much, and it destroyed her credit score for years!

Have a clear idea of what you will and will not say and be polite but direct about the outcome you want from the conversation.

6.    Be ready for a “special offer” to keep the card open

They will probably want to keep you as a customer and might be able to (or transfer you to someone who can) offer you some specials deals to keep you on board.

  • If you are sure you want to cancel, just be clear that’s what you want and ask them for the written confirmation.
  • If the new deal looks appealing, make sure it’s not for the purpose of acquiring more debt!
  • If the new offer of cheap debt will help you to pay off more expensive cards or invest the capital for a higher return, then that’s fine so long as you are sure you can manage it.
  • If however it just looks like a free ticket to a shopping spree, or you think that keeping all that available credit will in some way be just too tempting then stick to your guns and cancel the card.

7.      Get Written Confirmation

Request that the credit card issuer send a written confirmation that your card has been permanently closed with no outstanding balance. This will ensure that your rights are safeguarded in case of any disputes or errors on your credit report or your credit card account.

Keep your own record of the conversation, screen shots of the chat or copies of the letters or emails. Be sure to note names, dates and times so that you have some recourse should anything go wrong.

8.      Check Your credit card account & your credit score

Changes in your credit file can take a long time to appear, especially large payments or cancellations.

I’ve personally waited over 90 days for a fully paid off credit card to reflect on my credit report.

Put a reminder in your phone or in your diary to check that your score and your credit card account accurately reflect the changes you have requested. If after 90 days there is still no change, then start the process again but with your evidence of the previous request.

9.      Shred Your Card

Once you have received confirmation that the card is cancelled you can get out the scissors and go to town on that bit of plastic! Be sure to cut through all the important parts of the card such as the chip, the signature and the card number and dispose of the parts as completely as possible so that there is no risk of fraud.

10. Remove your details

Remember to remove the card details from your google auto complete, your online shopping site, phone apps and your PayPal account etc. too.


Can I reopen my credit card after cancelling it?

Credit card providers don’t allow you to reopen the credit card once you have closed it but after a certain period of time you can apply to become a new customer.

Can I get a refund from a closed credit card?

If you had a credit balance on your card at the time of closure or maybe you paid it off in full and then they took your monthly direct payment AFTER the account was closed then yes, they will transfer the positive balance back to you.

Can I still be charged from a cancelled credit card?

If all the dues were paid before the cancellation and you have written confirmation from the credit card provider, then you should not receive any charges. Any residual charges, fees or interest amounts that were not settled at the time of closure may be billed separately and if unpaid will remain as an outstanding balance with all the credit bureaus.

Can I cancel my inactive credit card?

If you have applied for a credit card but haven’t activated it yet, you can contact the credit card provider and let the company know that the card isn’t activated, and you wish to cancel the account.

Further reading and useful links

Here’s the tool kit to manage debts and create an effective payoff plan

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