If your card has been lost or stolen, or if you’ve got old credit cards lying around that you no longer use or you’re upgrading to a better card, here’s how to go about cancelling your account
What do I do if I lose my card or it is stolen?
As soon as you realise your credit card is lost or stolen, you should phone your provider and report the card as missing. You should be able to find the phone number on your provider’s website.
Some banks will allow you to deactivate or ‘freeze’ your card temporarily (you can often do this yourself via your provider’s app) which can be a useful option if you think you’ve simply misplaced it. You can then activate it again once it’s been found.
However, if your card is permanently lost or it has been stolen, your provider will cancel it and you should be sent a replacement card within 10 working days. If your whole purse or wallet has been stolen, you should also report this to the police who should give you a crime reference number.
If anyone uses your card fraudulently before it has been cancelled, your provider should refund you in full for these transactions. However, note that if your provider can show you’ve not taken responsible measures to keep your card details safe, including your PIN, you may be responsible for the first £50 of any fraudulent transaction.
In some cases, if the provider can prove the transaction was due to gross negligence on your part, it may refuse to refund you at all. If you believe this to be unfair, you’ll need to complain to your provider and ultimately the Financial Ombudsman Service.
Should I cancel a credit card I’m not using?
There are many reasons you might choose to cancel your credit card, such as:
- The 0% deal on your purchase or balance transfer credit card has come to an end and you’ve repaid the balance
- The interest rate on your credit card is too high and you’ve moved your remaining balance to a more competitive card
- You simply have too many credit cards and you’d like to narrow down the number of cards in your wallet.
Whatever the reason, before you cancel your credit card, it’s important to consider how it might affect your credit rating.
How does cancelling a credit card affect my credit rating?
You might think that cancelling your credit card would have a positive effect on your credit rating. After all, you’re closing an account, so you can no longer spend on your card and build up debt.
In fact, it can actually have a negative impact on your credit score.
One school of thought argues that it is generally better to keep old cards open, as long as you keep an eye on monthly statements for fraud and don’t go on a sudden shopping spree:
That’s because lenders tend to view customers who have high credit limits and relatively low balances as low risk from a creditworthiness perspective.
In other words, having access to funds but not actually drawing on them suggests you are solvent, in control of your finances and not reliant on borrowing.
The credit card industry uses the phrase ‘credit utilisation’ to measure how much of a person’s available credit they use each month. If you keep an old credit card open with a nil balance (rather than closing it) you will probably improve your credit score because your report will show you as having low utilisation.
Are there any benefits to cancelling a credit card?
Although keeping unused credit cards can help your credit score, there are still some benefits to cancelling a card.
For a start, it can make you less vulnerable to fraud. After all, if you have a credit card account you hardly ever check, you may not notice any fraudulent transactions.
Closing down a credit card can also reduce the risk of you deciding to spend on it again at a later date. And telling your provider you want to cancel the card may result in you being offered a more competitive deal, such as lower interest rates or better rewards.
How do I cancel my credit card?
If you decide to cancel an unused credit card, you’ll need to inform your provider by phone or in writing. You’ll also need to make sure you have paid off your most recent statement or transferred any remaining balance to another credit card.
As mentioned above, your credit card provider may try to keep your custom by offering you a more enticing deal, but only agree to it if you feel this will be of benefit – if not, stand your ground and cancel the card.
Note that it may take a few days for the cancellation to go through. Once your card has been cancelled, cut up the card through the name and number and throw it away.
What happens if I just stop using my credit card?
If you simply stop using your credit card – even if you cut it up – it won’t automatically be cancelled. Your account will still remain open even if you have cleared the balance and you’re no longer using the card.
However, if you don’t use your card for a long period of time, your card provider may contact you to say it is going to close the account unless you say not to.