When it could be a good idea to think about cancelling your credit card:
When you are looking for ways to avoid excessive spending, it may be a good time to consider cancelling your credit card.
If the terms of the credit card are no longer friendly, it may make sense to cancel your credit card. If the credit card has very high interest rates and you are no longer able to afford repayments, make the change.
If you are thinking about opening a new credit card, this might make sense. This could also help you avoid having multiple credit cards which could lead to you becoming over-indebted.
Tips for cancelling your credit card:
Consider the possible effect on your credit score. Keep in mind that good payment history will continue to help your score, while negative payment history will continue to hurt it even after your account is closed.
Lenders will consider your balance-to-limit ratio.
To offset the closure of one account, you could request a credit limit boost on another card in order to maintain the ratio.
To make sure closing one card doesn’t impact your score, pay off balances on all other cards.
The age of a credit card account is also an important consideration.
Make sure that you know who to contact in the event that you need to cancel your credit card.
Remember to redeem rewards before cancelling your credit card.
Pay down your balance in full. This will reflect well on you when applying for another credit card, as these lenders will take your balance-to-limit ratio into consideration.
Confirm once you are certain that your balance is zero. Make sure that you only cancel your credit card once you are completely certain that you have repaid the card in full.
