How To Cancel A Credit Card The Right Way

Whether you’re moving on from your first credit card to something more rewarding, or are concerned about credit card debt, make sure you know your why before you cancel. 

If you’re concerned about spending, examine your credit card statements for trends and problem areas. Will cancelling your credit card put a stop to unnecessary spending? Are you paying too much interest or card fees?  Maybe switching to a low-rate or zero-interest credit card could help you keep on top of interest charges.  

If you’re looking to upgrade — maybe because your income increased or you recently improved your credit score — you might want to graduate to a card that offers credit card rewards. If you know the reason for closing the account, you can discuss the situation with your bank. 
Closing a card can affect your credit score, positively or negatively. If you have a habit of overspending or you have other credit products, cancelling could help you. But if you’re struggling with debt repayments, applying for different credit cards might hurt your score. Before making any decisions, get a credit report to see your current score.

While closing a credit card may feel like a psychological win, you have options. You can speak with your bank about more suitable credit cards (lower interest, no fees or a balance transfer), reduce your credit limit, give your card to a loved one for six months while you pay it down, and use your debit card for everything. 
Share your concerns with your bank and see if you can keep the card open on your terms before switching to a different type of credit card.

If you decide to close the card, note all pending transactions and move recurring payments to a debit card. Print out your three most recent statements and highlight any automatic payments. You want to avoid missing any payments, especially if it affects your credit score when you close the card.

You’ll need to settle the remaining balance before you close the credit card. You can calculate any interest fees or pending charges as well as the credit balance, but your bank will provide you with a final payout amount. Your credit card must have a balance of $0 for your bank to officially close it. Pending transactions will prevent you from cancelling. 

If you’re unable to pay off the full balance but want to get rid of the card as soon as possible, consider a balance transfer to a low-interest card. For example, Westpac offers 0% p.a. for 28 months. That’ll give you over two years to pay off the debt without incurring interest. 

If your credit card is in the green (and you want to close it to switch to a better product), request a refund. This money can be transferred to another account. 

Before you close your credit card, make sure your rewards points come with you. 

If you’re a Westpac customer, any unclaimed rewards points expire 90 days after closing the account. For NAB customers, it’s 60 days from the closure date. Call your bank to claim all your points and find out how to access them. 

Now you can officially close your credit card. Get written confirmation from your bank, then grab those scissors and destroy the card by cutting along the numbers and through the microchip. You can’t reopen a closed credit card account.