How to cancel credit cards without hurting credit scores

Perhaps that enticing welcome gift promotion from a major bank doesn't excite you anymore, and your annual fee waiver negotiation rituals won't budge. Maybe those discretionary purchases spiked up because you feel that it's easy to swipe now and enjoy a refreshing bubble tea or travel to Paris.

But some credit card issuers can be annoying in that they pull the best benefits once you're in their ecosystem. If your credit card doesn't serve you well, it's time to get rid of it before you're charged with the annual fees.

Find out how to cancel your credit card painlessly in this guide.

How will you know if it's the right time to cancel your credit card?

Here are some telling signs that you need to say goodbye to your credit card:

• High annual fees. Ever feel like your credit card's annual fee is just a high jump you can't clear, especially when the rewards don't pile up on the other side? Imagine shelling out S$300 yearly for travel perks you barely use. It might be time to cut ties if the math doesn't add up.
• Low credit limit. Are you stuck with a credit limit that won't budge upward despite your spot-on payment history? When other cards in your wallet offer higher limits and sweeter terms, it might be a sign to part ways with your stingy plastic friend.
• Poor rewards programme. If your card's rewards feel like they're tailored for someone else's spending spree (hello, dining points when all you want are grocery goodies!), it's probably time to look for a card that gets you and your lifestyle.
• Bad customer service. Ever get the feeling your credit card's customer service team is more lost than you are? Consistent frustration over unresolved issues can sour any cardholder's experience. If peace of mind is what you seek, seeking other options may be the best option.
• Too many credit cards. Juggling a deck of credit cards can feel like a precarious balancing act. If simplification sounds like music to your ears, trimming down to a few trusty cards could bring harmony back to your finances.
• Unused perks. It's like having a gym membership but never going-you pay for cool benefits (airport lounges, anyone?) but never use them. Assessing whether those perks justify the annual fee could save you from paying more.
• Change in financial situation. Life's a rollercoaster, and sometimes your finances may be downward due to job loss, sickness or death of a loved one. A shift in your monetary landscape might prompt reevaluating whether that credit line is still worth maintaining.
• Challenging debt management. If you're struggling with credit card debt, cancelling a card after paying it off can prevent further debt accumulation.
• Better options with other banks. The credit card market is competitive, and better offers may become available. If you find a card with lower fees, waived annual fees for life, better rewards, or more suitable benefits, switching may be the best move for you.
• Security concerns. If you've experienced security issues with a card, such as repeated fraudulent transactions, and you're unsatisfied with the issuer's response, cancelling the card might be better than arguing with customer support or an agent.

What to do before cancelling credit cards?

Before you call the bank, make sure you follow the following steps.

1. Assess the impact on your credit card utilisation

Understand that your credit utilisation ratio-the amount of credit you're using compared to your total available credit-may increase if you cancel a card, which can negatively impact your credit score.

If you have other cards, ensure that the remaining available credit is sufficient to keep your utilisation ratio below 30 per cent, which is generally recommended for a healthy credit score. The goal is to aim for that sweet spot to show lenders you're not overly reliant on credit.

This table clearly illustrates how cancelling a credit card with a S$5,000 limit affects your credit utilisation ratio, assuming you have a total debt of S$2,000.

When the available credit decreases from S$10,000 to S$5,000 while the amount owed remains constant, the credit utilisation ratio doubles from 20 per cent to 40 per cent.

That said, consider carefully whether you should cancel cards at this point. But if you're not that concerned about your credit score, you can proceed without regrets.

2. Redeem your rewards

This UOB EVOL credit card used to be a great way for me to earn eight per cent cashback from Grab. However, a lifestyle change meant I no longer use Grab and this card.

Before you part ways with your card, do a rewards treasure hunt. Log in or glance over your statement to spot any unclaimed goodies-points, air miles, or cashback waiting to be redeemed. It's like finding money in a jacket pocket: use it or lose it.

Why so? Rewards are typically forfeited upon account closure. For example, if you have accumulated air miles, you might book a flight or upgrade a ticket. If you have vouchers or gift certificates to redeem, claim them before proceeding with the cancellation.

3. Update automatic payments

Go through your credit card statements to check any recurring charges, such as utility bills, subscription services, or insurance premiums, that are automatically charged to your card.

Before cancelling the card, switch these payments to another credit card or a different payment method, such as a debit card, e-wallet, or bank transfer.

This ensures you get all payments, which could lead to service interruptions, late fees, or negative marks on your credit report.

4. Pay off any outstanding balance

Clearing your balance means you can walk away, no strings (or fees) attached, and close that chapter with clarity. So ensure you fully pay off any outstanding balance on the card you intend to cancel.

This is crucial because you may be unable to close the account with a balance remaining, and leaving a balance could result in continued interest charges.

Once the balance is cleared, you can cancel without worrying about lingering financial obligations to the card issuer.

How to cancel a credit card in Singapore the right way?

Alright, so you've decided to cancel your credit card and are calling the bank's hotline. Picture this: the customer service rep on the other end picks up, and naturally, they're curious about why you're cancelling your card.

This isn't them getting all nosy-it's just what they do, part of the routine. You can simply share that you aren't taking much action on the card these days. More often than not, they'll get the hint and back off.

Some banks might also have their customer service representatives try to persuade you to continue using the card, like offering a waived annual fee for life-just tell them you're not interested.

Here's a summary of the list of banks and how to cancel the card:

How to cancel AMEX credit card

Cardholders can call the customer service number located on the back of their AMEX card. This is a direct and immediate way to request card cancellation.

How to cancel Citibank credit card

Cancelling a Citibank credit card is pretty straightforward.

• Contact Citibank. Call Citibank's 24-hour hotline at 6225 5225 to initiate the cancellation.
• Verification. During the call, you must provide your NRIC/FIN/credit card number, followed by the # key, to verify your identity.
• Speak to a representative. After entering your details, followed by the # key. Next, press *0 to speak to a customer service officer who will handle your request.

How to cancel a CIMB credit card

Cancelling a CIMB credit card can be done in two ways: by phone or in person.

Option 1: Cancel by phone

• Call the hotline. Dial the CIMB customer service hotline at 6333 6666. This service is available 24/7.
• Verification. You will likely need to verify your identity during the call by providing personal details and answering security questions.
• Request cancellation. Inform the customer service representative that you wish to cancel your credit card. Be prepared to explain your reasons, as this is a standard procedure.

Option 2: Cancel in person

• Download and complete the maintenance form. Visit the CIMB website to download the CIMB credit card maintenance form.
• Print and complete the form. After downloading, print out the form and fill in the required details, including your reason for cancellation.
• Visit a CIMB branch. Take the completed form to a CIMB branch. It's advisable to call ahead and check if you need to make an appointment.

How to cancel a DBS credit card?

Don't want to listen to hours of automated voice messages before getting connected to a customer service officer?

You can now cancel your DBS credit cards online.

• Go to the DBS website. Click on the chat box icon at the bottom right of the screen.
• A chatbot will pop up. Type "Terminate Card"
• You'll be prompted to sign in to your DBS iBanking account
• Select the credit card you plan to cancel and verify
• Done.

Otherwise, you can cancel your card the conventional way by speaking to a customer service officer on the 24-hour DBS/POSB customer service hotline at 1800 111 1111 (from 8 am to 12 am). If you're overseas, call +65 6327 2265 instead.

How to cancel HSBC credit card

You can cancel your HSBC credit card in two ways: online via the HSBC banking website or by calling the HSBC Customer Service hotline.

Online cancellation

• Log into HSBC internet banking. Access the HSBC website or mobile app and log in with your credentials.
• Initiate chat. For website users, click on the "Chat" icon located at the bottom right corner of the page. Mobile app users should tap on the "Support" tab.
• Request cancellation via chatbot. Once in the chat, you can request the cancellation of your credit card through the Chatbot, which will guide you through the process.

Cancellation via customer service hotline

• Call HSBC customer service. Dial 6472 2669 to reach HSBC's customer service.
• Request card cancellation. Once connected, you can request the cancellation of your credit card. You may need to verify your identity and provide details of the card you wish to cancel.

How to cancel Maybank credit card

To cancel a Maybank credit card in Singapore, you should follow these steps:

• Contact customer service. Call the Maybank Singapore customer service hotline at 1800 629 2265 if you are in Singapore. For overseas callers, dial +65 6533 5229. This service operates 24 hours.
• Receive confirmation. After the cancellation process is completed over the phone, Maybank will typically send you a notification confirming that your credit card account has been closed.
• Record cancellation date. It's important to note the date of cancellation, as this may affect when you can reapply for a new credit card and qualify for new customer sign-up bonuses.

How to cancel OCBC credit card

Banks want you to hold on to their credit cards. So, naturally, they will make it inconvenient for you to cancel them. To make matters worse, many banks like OCBC don't explicitly allow you to cancel your credit card online.

You'll have to call the customer service hotline, hold and wait in line for half an hour before speaking to a customer service officer.

To cancel your OCBC credit card, you'll have to call the OCBC customer service hotline at 6363 3333. If you are overseas, call +65 363 3333 instead.

Wait until all the announcements in English and Chinese are over, select your language (1 for English), enter your NRIC or card number, and then select 0 to speak with a customer service officer.

You can also terminate your credit card in person by doing the following:

• Download this OCBC credit card maintenance form
• Print and fill out the form with your details
• Take it to an OCBC branch in person

How to cancel POSB credit card

To cancel a POSB credit card, you can do it via phone or send a written notice.

• Contact sustomer service. Cardholders can call the POSB Customer Service Centre at 1800 339 6963 if they are in Singapore, or at (65) 6339 6963 if calling from overseas.
• Written notification. Cardholders must send a written notice to cancel their credit card. This notice does not require a reason for cancellation but must include the card account number and the cardholder's signature. The written notice should be sent to the following address: DBS Cards. Orchard, Road P.O. Box 360, Singapore 912312.

How to cancel Standard Chartered credit card

You can cancel your Standard Chartered credit card through the online banking website or mobile app.

After logging in, go to the menu bar and click on:

• Help & Services
• Card Management
• Credit Card Cancellation
• Select a reason for cancelling card
• Select credit card to cancel
• Key in your mobile number so the Standard Chartered team can contact you
• Screenshot and keep the reference number handy
• Wait for a cancellation completion email and SMS
• You may receive one more credit card statement after the cancellation

For those who have never bothered to use internet banking, you can simply call the Standard Chartered customer service hotline at 6747 7000 (8 am - 8 pm).

How to cancel a UOB credit card

You can cancel your UOB credit card via the UOB TMRW mobile app.

First, log in to your UOB mobile app, then:

• Choose the credit card you're cancelling (from the main page)
• Tap on "Cancel Card".
• Select your reason for cancelling the card.
• Click "Next".
• Review the details and swipe right to confirm your cancellation request.

Otherwise, you can call the UOB customer service hotline at 1800 222 2121. If you're overseas, call +65 6222 2121 instead.

Go through all the automated menus and request to speak with a customer service officer by pressing 0, followed by 3 for credit card enquiries.

Will you hurt your credit score if you cancel your credit card?

Yes, cancelling a credit card in Singapore can potentially hurt your credit score. This impact is due to changes in your credit utilisation ratio, which is a significant factor in determining your credit score. We covered this above.

Here are key points to remember:

• Credit utilisation must be in the sweet spot. When you cancel a credit card, the total available credit limit decreases. If you have balances on other cards, this reduction in available credit increases your overall credit utilisation ratio. Here's the thing: a higher credit utilisation ratio can negatively affect your credit score because it may appear that you are over-relying on credit.
• Length of credit history. Cancelling a card, especially one you've held for a long time, can affect the length of your credit history. A longer credit history generally benefits your credit score, so removing a card with a long history could have a detrimental effect.
• Credit mix and number of accounts. Various credit types and a reasonable number of open accounts can positively impact your credit score. Cancelling a card reduces the diversity and number of your credit accounts, which could negatively influence your score.

And there you have it — you've officially Marie Kondoed your wallet. Pat yourself on the back for sparking joy (and a bit more space) in your pocket.

ALSO READ: 4 key questions to ask yourself before signing up for a credit card

This article was first published in MoneySmart.