Cancelling your credit card? Here is what you need to know

Published on November 19th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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You may think that cutting up your plastic and throwing it away is the way to go when cancelling your credit card, but there is more to it than that. Although cancelling your credit card is not a complex process, these tips can help you cancel your card without hurting your credit score.

Is there any outstanding balance?

Before you say goodbye to your credit card, check to see if there is any outstanding balance on the card. Cutting your card before you pay off your balance in full can affect your credit score. The more you put it off, the more damage your credit score. This also means paying off any debt that is on the card to improve your chances of a better interest rate on your card.

Transfer your reward points

Rushing to close your credit card without checking if you have reward points can be a bummer, especially if you were saving points for a big-ticket item. You can opt to transfer your points to a partner program or use them to redeem them. If you are planning on redeeming your points, carefully consider which option will give you the best value for your money.

Joint accounts considerations

If your credit card was opened using a joint account, both cardholders need to agree on closing the account. It will also be helpful to discuss with the other cardholder in terms of how you are planning on paying off the debt on the card. If both holders refuse to pay the remaining debt, it can affect both of your credit scores. Remember to cancel any debits that may be on the card to avoid being slapped with a penalty fee.

Check in with your lender

Depending on your card lender you may be required to either call or tell them in writing that you will be cancelling the card. However, they may refuse to cancel the card if you still have outstanding balances. To protect yourself from any issues later on down the road it is important to keep records of who you spoke to and when you cancelled the card.

Confirm that your card has been cancelled

Before you go on a card snipping spree, it is important to check that the card has been cancelled. You can do this by Logging into your account. Your credit card provider will also send confirmation that your account has been closed. If you have are still receiving statements for the card make sure to contact your lender immediately.

Once you have officially cancelled your credit card it can open up a door to finding a card that comes with an interest rate and fees that are suitable for your finances. Keep in mind to compare the cards features and whether they will be suitable for your needs. Always remember to read the fine print to avoid taking something that can cause you to fall into a debt spiral.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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