What to do with unused credit cards
and how to cancel them

There are many reasons why we can end up with unused credit cards. It might be a 0% purchase card we no longer use because the promotional period ended, a balance transfer card that’s been paid off, or a reward card we have no use for anymore.

How many credit cards is too many?

The number of cards you should have depends on your needs, financial circumstances, and how you use them. Remember that different cards suit different purposes, such as repaying debts, spreading purchases, reward schemes or overseas spending.

However, the more credit cards you have:

• the higher the temptation to spend beyond your means
• the harder it is to keep track of repayments and account management
• the higher the risk of fraudulent use
• the higher the risk of losing them or forgetting password or PIN details

What should I do if I have an unused credit card?

Should you cancel unused credit cards or keep them? There’s no one right answer, and several factors to consider. For example, cancelling a card may:

• Reduce risk of fraud - an open account you hardly ever check up on may be more vulnerable to fraudsters, who may pretend to be you in order to spend money in your name.
• Decrease your chances of getting credit. It can be good to show lenders that you can successfully manage multiple credit accounts, as they may see this as evidence that you’re a reliable borrower. So, cancelling a long-held card could put you at a disadvantage, depending on what the lender is looking for. What’s more, cancelling a card may increase your credit utilisation – the proportion you use of your available credit – which can also lower your score. For example, if you have an overall limit of £1,000 and you use £250 of it, your credit utilisation is 25%. But say you cancel a card and your overall credit limit shrinks to £500 – if you’re still using £250 in credit, your credit utilisation will now be 50%.

Does closing a credit card affect my credit score?

First off, it’s important to understand that you don’t have just one, universal score. Each lender will give you a score when you apply for credit, and they all have their own way of calculating it. Typically, they’ll take into account information on your application form and credit report – as well as any data they hold on you if you’ve been their customer before. So, cancelling a credit card may impact your score, but it really depends on the lender.

One reason your score may be negatively affected is that your overall credit utilisation may increase. Credit utilisation is the percentage you use of your credit limit. For example, if you have an overall credit limit of £2,000, and you use £1,000 of it, your credit utilisation is 50%. But if you cancel a card and your limit is reduced to £1,500, you’ll be using 75% of it.

When deciding whether to approve you for credit, lenders take into account the limits available to you – not just what you owe – to judge whether you can cope with new credit. As a general rule, they like to see you keeping your credit utilisation below 25%.

However, keeping long-held, well-managed credit accounts can improve your score with some lenders. This shows you’ve been a reliable borrower in the past, which may suggest you’re likely to repay other lenders too.

You can get a good idea of how lenders may see you by checking your free Experian Credit Score.

How do you cancel an unused credit card?

The most important things to remember is to tell the card company, by calling them or putting it in writing, and make sure you’ve paid off your most recent statement or transferred it to another card first. You can’t cancel a card simply by cutting it up into several pieces, cancelling direct debits, or just not using it any more – this could lead to missed payments, which can put you at risk of getting a default or even a CCJ (County Court Judgment).

Quite often, if you don’t use your card for a long time, your provider might send you a letter saying they’ll close it unless you say otherwise.

Once you’ve confirmed you want to cancel your card, the provider may try to keep you as a customer by offering incentives to stay, such as benefits or a different card. Some people may even phone up to deliberately try and get a better deal! By all means consider the incentives – but if you’re certain you want to cancel your card, go ahead and do it.

Can you close a credit card account with a balance?

If you still owe the card provider, you won't be able to formally cancel a credit card. You can let the provider know you want to cancel it, but they will keep it open (visible on your credit report) until it is paid off.

You can however move your credit balance to a balance transfer credit card with another provider. In some cases you may be able to get a balance transfer offer on an existing unused card. To apply for a new card, you’ll have to get a credit check, which will appear as a hard search on your credit report. We're a credit broker, not a lender†