Ways to cancel your credit card

Canceling a credit card can help manage debt, especially as credit card debt grew 15.8% in the first quarter, according to SingStat. High annual fees, interest rates, and the temptation to overspend are common issues. 

This guide provides clear, actionable steps to cancel your credit card wisely and avoid common mistakes.

Consequences of Canceling a Credit Card

Canceling a credit card can significantly impact your financial health and credit score. It’s important to understand these consequences before making a decision:

    • Loss of Available Credit. Closing a card reduces your total available credit, which can increase your credit utilization ratio and potentially lower your credit score.
    • Lose rewards and perks. Premium credit cards often come with perks such as cashback, airline miles, hotel discounts, travel insurance, and access to airport lounges.
    • Shorter credit history. Closing a credit card can shorten your average account age, especially if it’s an older account. Lenders typically prefer longer credit histories, so this might impact your creditworthiness.
    • Potential Fees and Balances: Closing a card with an outstanding balance could lead to more fees or affect your ability to pay off the balance.
    • Impact on Future Credit Applications: Lenders may consider your credit utilization ratio and credit history length when evaluating future applications.

How to Avoid Hurting Your Credit Score After Closing a Credit Card

Below are key considerations and actionable strategies for mitigating the impact of canceling a credit card to ensure a healthy credit profile.

Pay Down Balances

If you cancel a credit card and leave a balance, you’ll get a negative rating on your credit score. Credit card companies will most likely collect the amount that remains unpaid while applying the same interest rate. 

For instance, if you have three cards and want to cancel one, paying the balances on your other cards is ideal to ensure that your credit utilization remains low. Ensure there is no remaining balance to prevent additional charges and a negative credit report. 

You may also receive a refund check if you cancel with a zero balance.

Consider Keeping the Card Open

Keeping a credit card open, especially one without an annual fee, can benefit your credit score. For example, you have two credit cards, one of which doesn’t have an annual fee. A strategic move is to keep it open and make occasional purchases to keep it active.

If you must cancel, consider opening a new card to maintain your total available credit. However, the hard inquiry might temporarily affect your credit score.

Other Options Before Canceling Credit Cards

In many cases, simply calling your bank can provide solutions that don’t involve closing your account. Be prepared with your account information and explain your reasons for considering cancellation. You may also ask for alternatives, such as lowering your interest rate, waiving annual fees, or setting up a payment plan. 

Options that don’t involve closing your account are:

  • Downgrading to a No-Fee Card

When considering closing a credit card, downgrading to a no-fee card with the same issuer can be a wise alternative. This approach helps you maintain your credit health while avoiding some drawbacks of canceling a card outright. 

  • Transferring Balances to a Lower-Interest Card.

You can transfer your balances to a lower-interest card and save on interest charges. This way, you can keep both cards open and your credit utilization ratio lower. You will also improve on paying down your debts on the lower interest card.

  • Keeping the Card Open with Minimal Use

Instead of cancelling a credit card, keeping it open with minimal use can be a strategic way to maintain a healthy credit profile. This effectively manages your credit score and overall financial health.

Pros and Cons of Canceling a Credit Card

Deciding whether to cancel or keep unused credit cards is a significant financial decision that impacts credit scores and overall financial health. Here is a rundown of the pros and cons of cancelling your credit cards:

Benefits

    • Avoid Fees. Cancelling eliminates any associated annual fees or charges.
    • Reduces Spending Temptation. Fewer open credit card accounts can help you avoid the temptation to overspend.
    • Simplifies Financial Management. Managing fewer accounts makes it easier to stay organized and monitor for fraudulent activity.
    • Limits Fraud Risk. Closing an unused card eliminates the risk of it being used fraudulently.

Risks

  • Shortens Credit History. It may reduce the length of your credit history, potentially lowering your credit score.
  • Increases Credit Utilization Ratio. This ratio reduces your total available credit, which can increase your credit utilization ratio.
  • Reduces Credit Mix. Fewer open credit accounts can negatively impact your credit mix.
  • Loses Potential Benefits. Cancelling the card means losing any associated rewards, points, or other benefits.

Weigh the pros and cons based on your financial situation and goals. If canceling a card has a significant negative impact on your credit score. If you still benefit from its rewards and features, keep it. Otherwise, if the card comes with high fees or contributes to financial mismanagement, the better option would be to cancel.

canceling card

Steps on How to Cancel Credit Card

Should you finally decide to cancel your credit card, here’s a pre-cancellation checklist to help you avoid potential negative effects on your credit profile and ensure a smooth process.

  1. Review Your Statement. Check balances and confirm that there are no outstanding balances on the card. Note any pending transactions that still need to be processed.
  2. Pay-Off Balances. Clear any outstanding balances to avoid interest charges and ensure a clean closure. Confirm that your payment has been processed and that the balance is zero. You may also try to request that the annual fee be waived
  3. Use Rewards. Before closing the account, redeem accumulated rewards as rewards are typically forfeited upon closure. These include points, cash back, and other benefits such as travel credits or insurance coverage.
  4. Update Automatic Payments.  List all automatic payments and direct deposits linked to the card. Transfer automatic payments to another credit card, debit card, or e-wallet to avoid missed payments and penalties.
  5. Notify Authorized Users. If applicable, inform any authorized users about the card cancellation.
  6. Contact Customer Service Hotline. Call the credit card issuer’s customer service representative to confirm the account closure process.
  7. Request Confirmation. Get a written confirmation of the cancellation request and details on account closure. This confirmation should include the date of closure and any final instructions. Keep this confirmation for your records as proof of the account closure.
  8. Dispose of the Card. Cut up the canceled credit card through the chip and magnetic strip to prevent it from any unauthorized use.

These steps allow you to navigate canceling your credit card while minimizing potential complications.

how to cancel card

How to Cancel Credit Cards from Major Banks

Generally, the same steps will be followed for your  UOB, OCBC, Citibank, DBS, or HSBC credit cards. Here they are:

1. Contact Customer Service

Look for the customer service number on the back of your credit card. You can also visit the credit card issuer’s official website for their contact details.

Bank

Contact info

DBS

Website: https://www.dbs.com.sg/personal/support/card-issues-terminate-card.html


Contact No.: 1800-111-1111 (24/7 hotline/general inquiries)


You may also use their Digibot services here.

UOB

Website: https://www.uob.com.sg/personal/customer-service/credit-card.page


Contact No.:  1800-222-2121 (24/7 customer service hotline)


Use their UOB digital assistant here.

HSBC

Website: https://www.hsbc.com.sg/contact/ You will also find chat services through this website.


Contact No.: +65 6-HSBC NOW or 6-4722 669

Citibank

Website: https://www.citibank.com.sg/static/contact/


Contact No.: +65 6225 5225 (hotline – 8 a.m. to 8 p.m.)


Email: customerservice@citibank.com.sg

OCBC

Website: https://www.ocbc.com/personal-banking/help-and-support/cards/general


Contact No.: 1800-363-3333 (24/7 hotline)

                        +65 6363 3333 (overseas)

2. Request Cancellation

Inform the representative that you want to cancel your credit card. While you’re not obligated to provide a reason, explaining why you’re canceling can sometimes lead to better offers or solutions from your card issuer.

3. Verification

Be prepared to provide your card number and answer security questions to verify your identity. This is to ensure that you legitimately and authorize the request.

4. Confirm Closure Details

Ensure the account will be closed with a zero balance and no pending transactions. If there are any outstanding charges, you will need to pay them off before the account can be closed. Ask for a final statement to confirm that all dues are cleared and the balance is zero.

5. Request Written Confirmation

Get a written confirmation of the account closure request through a letter or email and follow any final instructions by the issuer to complete the closure process.

6. Cut and Dispose

Once you’ve confirmed the account is closed, cut your credit card through the chip and magnetic strip to avoid unauthorized use. For added security, dispose of the card pieces in different trash bins.

FAQs

1. When should I cancel my credit card? 

You should consider canceling your credit card when it no longer aligns with your financial goals or lifestyle, to avoid unnecessary fees, and when you have responsibly transferred any remaining balances or rewards to another card.

2. Will canceling my credit card hurt my credit score?

Yes, canceling your credit card can potentially affect your credit score. This is because it can impact several factors that influence your score such as your credit utilization ration, length of credit history, and your credit mix.

Still, the impact on your credit score can vary depending on your overall credit profile and how you manage your remaining credit accounts.

3. Can you close a credit card with balance?

You can still close a credit card even if you have balance on it. But you are still responsible for paying these balances and will still be charged interest on these amounts. It is best to consult your provider on their specific term and conditions on this matter.

4. How do I initiate the cancellation process and what information is needed?

To initiate the cancellation process, contact your bank’s customer service hotline or visit a branch. 
You typically need to provide your card number, personal identification details, and reasons for cancellation. Identification details may also include your NRIC (National Registration Identity Card) number if you are a Singaporean citizen or PR, or your passport number if you are a foreigner residing in Singapore.

5. Are there any fees or penalties for canceling?

Yes, depending on the credit card company and the terms of your card agreement, there can be fees or penalties for canceling a credit card. These may include early termination fees, outstanding balance fees, or a pro-rated annual fee.

It’s important to check with your bank directly to understand any potential costs before canceling.

6. How do I confirm that my card has been successfully canceled?

Your bank will provide you with confirmation and may also send you a formal notification or confirmation email. Contact your bank’s customer service if you have not received any of these.

Final Considerations

Canceling a credit card requires careful consideration and planning. You can navigate this process by proactively managing your budget, prioritizing debt repayment, and monitoring your credit. Remember, each financial decision shapes your financial future; stay informed and proactive and seek financial advice to strengthen your overall financial health.

Key Takeaways:

  • Canceling a credit card can affect your credit score by increasing your credit utilization ratio and shortening your credit history, which are crucial for maintaining good credit health.
  • Before canceling, consider alternatives like downgrading to a no-fee card or transferring balances to a lower-interest card to maintain your available credit and benefits without significantly impacting your score.
  • Clear any outstanding balances, redeem rewards, update automatic payments, and get written confirmation from your issuer to avoid common pitfalls and ensure a smooth cancellation process.

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