How To Cancel Credit Cards Without Impacting Credit Scores

By Dave Nyam •  Updated: 02/20/24 •  5 min read

The cancellation of a gold card is seen with a lot of apprehension in the financial landscape of South Africa. The common belief is that such a step could dent your credit score. But that’s not always the matter. If all your charge plate balances have been cleared to zero before cancelling, there might be no dent in your loan rating. Keeping unused credit cards open is generally advisable, but there are good reasons to close them. For example, closing out joint charge plates upon separation or divorce may be prudent. Similarly, if your gold card company is charging high annual fees, it may be prudent to cancel it. These points will be explained in great detail in the article.

How To Cancel Credit Cards Without Impacting Credit Scores

To avoid hurting a loan rating, follow the following steps when closing a charge plate in South Africa: Contact your plate issuer online or by phone. If the card is paid on an annual fee basis, negotiate with customer service. They might waive the fee or offer a no-annual-fee version. Make sure that the remaining balance is paid off before closing the card. If not possible, switch the balance to a low-interest card or set up a payment plan with your issuer.

Also, do not forget to redeem the remaining rewards—these will be lost after a cancellation. Update the billing information for any automatic payments or subscriptions to the card. You can close the account once you have confirmed a zero balance with your issuer. Finally, destroy the cancelled card to prevent any misuse.

Does Cancelling Credit Cards Impact Credit Ratings?

Closing a charge plate can impact your loan rating in South Africa, not the closing, but the side effects that can affect your scores. These could potentially have a more damaging impact on your score, but it is generally less significant than missing a payment. Closing an account, for example, could bump up your credit use of your credit as a proportion of its limit, not only increasing the use of credit across the account in question but also reducing the average age of your credit history.

What To Do With Unused Credit Cards

South Africans always ask what to do with an unused credit card. The answer is not always easy and depends on different factors. Cancellation might reduce the risk of fraud, given that unchecked open accounts are vulnerable. However, it may lower your chances of getting credit. In the case of long-held card cancellation, one may stand a greater chance of being disadvantaged than enhanced.

In addition, the cancellation can raise your credit utilization – the overall credit amount you are using, in other words. This could decrease your score. For example, if your overall limit was R1,000 and you utilized R250, your credit utilization is 25%. But if you close a card and your overall limit goes down to R500 and use R250, your utilization will be 50%. 

Is It Better To Cancel Unused Credit Cards Or Keep Them?

Numerous personal and financial factors come into play in determining whether to cancel or maintain the unused cards. There are numerous pros and cons for each decision. Some of the important factors are:

The best choice would depend on the period of possession of this card, level of usage, card member benefits, and credit goals. If you want to cancel a charge plate, do it correctly to avoid harming your loan rating.

How Long Should You Wait To Close A Credit Card?

If you need to close a charge plate account, a year or more should have passed since the profile was opened. This is due to the possible negative consequence on the credit score and, hence, on its identity with the card-issuing entity in the event of the cancellation of the credit card account in the first year. When you close a credit card, you’re decreasing your available credit, and it can reduce your credit score. It can also result in the issuer taking away your welcome offer or closing other accounts if they feel you are gaming the system. So, closing the credit card should be avoided until one year unless a strong reason befalls, like heavy annual fees or after a security breach.

Keep Reading

How to Get A Capital One Credit Card Number?

How to Get A Capital One Credit Card Number?

It has become imperative to understand where your credit card number can be accessed for smooth transactions and good financial management.

Credit Card Loan Repayment Calculator

Credit Card Loan Repayment Calculator

The article will touch on the deconstruction of the loan repayment calculators for loans taken on a credit card

Credit Card Advantages & Disadvantages

Credit Card Advantages & Disadvantages

This paper deliberates on the dual nature of plastic plates by showcasing the benefits/demerits against a piece of advice on using them wisely.

What Differentiates A Debit From A Credit Card?

What Differentiates A Debit From A Credit Card?

What Differentiates A Debit From A Credit Card? This post delivers the differences under unique features, benefits, and more.

How to Use Credit Card to Increase Credit Score

How to Use Credit Card to Increase Credit Score

Here is an insight into how your credit card can help enhance your credit score and financial health.

How to Use A Credit Card to Build Credit Score

How to Use A Credit Card to Build Credit Score

This article will guide you on using a credit card to build a score in South Africa and have certain common queries answered.

Can You Purchase V-Bucks Using A Credit Card?

Can You Purchase V-Bucks Using A Credit Card?

The player population must be acquainted with the expertise of making payments for purchasing V-bucks that facilitate customizing their gameplay effectively.

Can Magnet Damage Credit Card?

Can Magnet Damage Credit Card?

Can Magnet Damage Credit Card? This article delves into the issue of the susceptibility of credit cards to magnetic fields

Why Credit Cards Are Not Considered As Money

Why Credit Cards Are Not Considered As Money

This posting will look deeply into the basic differences between credit cards and money, considering the characteristics that define money

How to Check Credit Card Details On Takealot

How to Check Credit Card Details On Takealot

How to Check Credit Card Details On Takealot. In this blog post, we will take you through some common questions on Takealot.

Do You Need A Credit Card To Go To Turo?

Do You Need A Credit Card To Go To Turo?

Do You Need A Credit Card To Go To Turo? Traditionally, credit cards ruled the roost when it came to other payment methods,

Can Someone Check Your Credit Without Permission?

Can Someone Check Your Credit Without Permission?

Can Someone Check Your Credit Without Permission? This paper, therefore, tries to scrutinize the legality of unauthorized credit checks.

How Did Credit Cards Work Before The Internet?

How Did Credit Cards Work Before The Internet?

How to Use a Credit Card to Increase Your Credit Score

How to Use a Credit Card to Increase Your Credit Score

This guide provides measures you can take to ensure effective use of a credit card to increase your credit. 

How to Pay Credit Card Bills to Increase Credit Score

How to Pay Credit Card Bills to Increase Credit Score

This article explores the steps you can take to pay your credit card to increase your credit score.