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How to cancel a credit card

How to cancel a credit card
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You may have decided that you need to curb your spending and want to cancel your credit card, or you may want to take advantage of a new offer but not want too many credit card accounts open.

Whatever the reason for cancelling a credit card, it isn’t as simple as seeking out the kitchen scissors and cutting your plastic in half. Here is a step-by-step guide to cancelling your credit card.

How to cancel your credit card

1. Clear the balance

The first thing to do is to make sure that there is no remaining balance on the card. Your account will not be closed if there is anything outstanding.

If you are struggling to pay off the balance but do not want the card to be active any more, you can talk to your provider about freezing your account. This would stop you being able to use your card and allow you to focus on paying off your balance.

Alternatively, you could look into making a balance transfer to a card that has a 0% introductory term.

2. Stop direct debits

You do not want to leave any active direct debits when you close the account. Make sure you change the details for any direct debits that were being paid using the credit card.

3. Transfer or use reward points

If you have any outstanding reward points on a rewards credit card, try to use them before you close the account so you don’t lose them. Some reward programmes, such as frequent flyer programmes, allow you to transfer your points across, so it is best to check with your provider what the best option is.

4. Call your provider

The next step is to call your credit card provider and ask for your card to be cancelled. Most cards have the provider’s phone number on the back.

Alternatively, you can check on the provider’s website. The only time when it could become confusing is if your card is part of the American Express network. If the card is provided by American Express directly, then you will need to contact them to cancel. However, if the card is from another provider such as British Airways, you will need to contact the provider (in this case British Airways) directly.

When cancelling your card, ask for written confirmation from the provider. Additionally, ask that it is reflected on your credit report that you have requested that the card be cancelled.

5. Check your credit report

This is something we should all be doing regularly anyway, but a few months after you have closed your credit account it is best to check your credit report to see if your card has been cancelled. You can get a copy your credit report from Experian, Clearscore or Equifax.

6. Cut up your card

The most satisfying bit of the process is to destroy your credit card. Once you have cancelled the account, it is safe to cut the card up and dispose of the pieces.

Should I just keep my credit card open?

Having an unused credit card account open can work against you. Your credit score is partly determined based on how much available credit you have and how many active accounts. Some lenders would be cautious about lending to someone who has a large amount of unused credit, who could potentially max out their spending.

An unused credit card could also be a potential fraud risk: if it is an account that you do not monitor, then you may not notice if the card is being used fraudulently. Finally, cancelling your credit card could mean that you qualify for those best buy deals that are only available to new customers.

As with anything, there is an argument for, as well as against. If you have struggled to obtain a credit card in the past and are concerned you may not be approved for credit in the future, then it may be worthwhile keeping the account open and trying to use it sparingly to build up a good credit history.

Also, if you have only one credit card, it may be worth hanging on to it for emergencies. While credit cards can be costly, borrowing on a credit card is typically cheaper than using something like a fast-cash loan to cover unexpected expenses.

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