Cancel your Credit, Debit or ATM Card easily through our DBS digibot.
Part of: Guides > Digital Services, Card Replacements
Important information
- Inform all billing organisations and make alternative arrangement for your recurring bill payments. You may refer to your past statements to check if you have any recurring payment arrangement.
- Redeem all your DBS points, Daily$ (For POSB Everyday Card), Safra$ (For Safra DBS Credit/ Debit Card), TapForMore points (For PAssion Debit Card) before the card is terminated. Your DBS rewards will not be transferred to other active card(s) and will be forfeited upon card termination.
- For security reasons, please cut each card in half and dispose of them straight away. If there are outstanding balances remaining, your monthly statement will continue to be sent to you until full payment has been made.
- Please note that all active instalment plans (e.g. Personal Loan, My Preferred Payment Plan, Instalment Payment Plan) will be terminated along with the card termination. An early termination fee will be levied for each instalment plan(s) being terminated (please refer to the respective product Terms & Conditions for more information).
- If you have any credit balance on your card account, please request for a refund through us. Do not perform the transfer on your own as it will be regarded as Cash Advance which will be subjected to Cash Advance fee and charges.
Canceling a credit card is not as easy as it may look. Read our guide to make sure you're making the right decision and following the the steps to successfully close your account.
Duckju Kang, Founder, Chief Executive Officer - September 14, 2022
Banks regularly introduce new variants of credit cards with enticing features, like waived annual fees or S$100 in welcome bonus cash rebate. If you keep taking up some of these offers, you may soon end up with more cards than you need or can handle. Even if you are able to do so, having too many credit cards may be detrimental to a healthy spending habit as you find yourself scrambling to meet different minimum spending requirements every month.
If and when you do decide to cancel a credit card, keep in mind that it is not just a matter of cutting it into two and sending a cancellation request to your bank. Here, we discuss some of the most important precautions you can take to save yourself some money and a great deal of stress if and when you cancel a credit card.
Table of Contents
- Pay Off Your Balance
- Get Your Credit Balance Back
- Redeem Your Rewards
- Update the Billing Instructions
- Watch Your Credit Score
1. Pay Off Your Balance
First and foremost, you should always pay off any outstanding balance on your card before cancelling it. That’s not just the amount that appears on your last credit card statement. There are also the recent "pending" charges that have yet to appear on your credit card statement. Failing to do so can have a very big impact on your credit score and your ability to engage with a bank for other services in the future, like home loans, car loans or even other credit cards.
If you don't have enough cash on hand to pay off your balance, then you should consider getting either a debt consolidation plan or a balance transfer with a bank. These products are designed to help you make credit card repayments more easily over a course of a few months to a few years.
This makes balance transfer loans and debt consolidation plans ideal for consumers who need to get rid of their credit cards but are unable to do so because they don't have enough money to pay off their balance right away. By breaking up your repayment into small portions spread over a long period of time, you can more easily manage your card balance repayment while still cancelling your credit card immediately.
Furthermore, some banks continue to charge credit card accounts that have been closed if your account carries a credit balance for more than a year after closure. Although the amount that the banks charge is usually small, it’s best to double-check that your account is reduced to a nil balance before closure.
Receive More Money Tips from ValueChampion.
Stay up to date.
{"endpoint":"\/newsletter\/subscribe","style":"blue","title":"Keep up with our news and analysis.","version":"sidebar"}
Does canceling a credit card hurt your credit? You’ve likely heard that closing a credit card account may damage your credit score. And while it is generally true that cancelling a credit card can impact your score, that isn’t always the case. If you pay off all your credit card accounts (not just the one you’re canceling) to $0 before canceling your card, you can avoid a decrease in your credit score.
Typically, leaving your credit card accounts open is the best option, even if you’re not using them. However, there are a few valid reasons for deciding to close an account. It’s best to close joint credit card accounts during a separation or divorce, for instance, or if your credit card company chares high annual fees.
Read on to learn what they are—and to get details on how to cancel a card the right way.
Key Takeaways
- Closing a credit card account is sometimes necessary, despite advice against doing so.
- A credit card can be canceled without harming your credit score.
- To avoid damage to your credit score, paying down credit card balances first (not just the one you’re canceling) is key.
- Closing a charge card won’t affect your credit history (history is a factor in your overall credit score).
Understanding the Impact of Credit Utilization Ratio
Credit experts advise against closing credit cards, even when you’re not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
Closing a credit card can impact your credit utilization ratio, potentially dinging your credit score. Credit utilization measures how much of your total available credit is being used, based on your credit reports. The more available credit you use (per your reports), the worse the impact will be on your score.
Here’s a simple example of how closing a $0 balance credit card backfires:
- Credit card number one has a $1,000 limit and a $1,000 balance.
- Credit card number two has a $1,000 limit and a $0 balance.
- Your credit utilization on both cards combined is 50% ($1,000 total balances ÷ $2,000 in total limits = 50% utilization).
- Close credit card number two, and your credit utilization jumps to 100% ($1,000 total balances ÷ $1,000 total limits = 100% utilization).
You should aim to pay your credit card balances in full every month. Doing so not only protects your credit scores but also can save you a lot of money in interest.
Paying your balance in full is especially important before closing a credit card account. Provided all of your credit cards show $0 balances on your credit reports, you can close a card without hurting your credit score.
The higher the credit utilization ratio, the more it can negatively impact your credit score. That’s why it is commonly recommended to keep the ratio below 30%.
Good Reasons to Cancel a Credit Card
Canceling a credit card is usually a bad idea. Nevertheless, there are some circumstances in which a card cancellation could be in your best interest. Here are three.
Separation or divorce
It’s best to close joint credit card accounts during a separation or divorce. As a joint card holder, you’ll be liable for any past or future charges made on the account. It’s not uncommon for an angry ex to run up excessive charges on a joint card out of spite.
If that happens—or even if routine spending occurs on a joint account after separation—the charges will be your responsibility as well. Your divorce decree might state that your former spouse is responsible for the debt, but that won’t release you from your obligation in your lender’s eyes.
High annual fees
If your card issuer charges you a high annual fee for an account that you don’t use, cancellation might be warranted. However, if you receive benefits from the account that outweigh the annual fee, such as travel credits and perks, it might be worth the cost.
An annual fee on a credit card that you don’t use or benefit from is another story.
Before you cancel the account, call your card issuer to ask for the annual fee to be waived. Be sure to mention that you’re considering closing your account. It doesn’t hurt to ask, and you might be pleasantly surprised.
Too much temptation
Some people find the temptation to use credit cards too much to resist. And while this might be a valid reason to close a card for some, you can try other ways to curb overspending without sacrificing your credit score.
You could remove your credit cards from your wallet, for example, and store them in a safe place. By not having your cards readily available, you may find the temptation easier to resist.
Once a credit card is canceled, you won’t be able to reopen the account.
How to Cancel a Credit Card: 6 Steps
Let’s say you do decide that closing the account is the best move. Here are six simple tips to help you navigate the process:
- Redeem unused rewards on your account before you call to cancel.
- Ideally, pay off all your credit card accounts (not just the one you’re canceling) to $0 before canceling any card. At the very least, minimize your balances as much as possible.
- Call your credit card issuer to cancel and confirm that your balance on the account is $0.
- Mail a certified letter to your card issuer to cancel the account. In this letter, request that written confirmation of your $0 balance and closed account status be mailed to you.
- Check your three credit reports 30 to 45 days after cancellation to make sure that the account reports that it was closed by the cardholder and that your balance is $0.
- Dispute any incorrect information on your reports with the three credit bureaus.
Closing a Credit Card Won’t Impact Your Credit History
You may have heard that closing a credit card causes you to “lose credit” for the age of the account. That is mostly a myth.
Credit expert John Ulzheimer, formerly of FICO and Equifax, confirms that closing a credit card will not immediately remove it from your credit reports. “As long as the credit card remains on your report, you will still get the value of the age of the account in both the FICO and VantageScore branding credit scoring models. The only way to lose the value of the age of the card is if it’s removed from your reports,” Ulzheimer says.
A closed account will remain on your reports for up to seven years (if negative) or around 10 years (if positive). As long as the account is on your reports, it will be factored into the average age of your credit.
15%
The percent that FICO uses to factor in credit history as part of your overall credit score. Payment history and amounts owed, which have the largest impact out of five categories, account for 35% and 30%, respectively.
How does closing a credit card affect your credit score?
Your credit score might be hurt if closing the card changes your credit utilization ratio. Credit utilization measures how much of your total available credit is being used, based on your credit reports. The more available credit you use, the worse the impact will be on your score. Aim for a ratio of around 30%.
How do you keep your utilization rate low?
Don’t keep a large balance, and do this by paying it off every month (this will also save you from paying interest). Provided all of your credit cards show $0 balances on your credit reports, you can close a card without hurting your credit score.
Will closing a card damage my credit history?
Not really. A closed account will remain on your reports for up to seven years (if negative) or around 10 years (if positive). As long as the account is on your reports, it will be factored into the average age of your credit.
The Bottom Line
Don’t close a credit card account without a good reason. Having a lot of credit cards won’t necessarily hurt your credit score significantly if you handle them responsibly. However, if you need to cancel a card, do your best to reduce all your credit card balances first (preferably to $0), so you can either minimize or totally avoid any credit score damage.