What Happens When You Close a Credit Card in the UK?

There are plenty of reasons that someone might want to close a credit card. 

Maybe it's gathering dust in a drawer, or maybe it’s racking up an annual fee without offering much in return. 

Or maybe it just feels like a temptation that’s best removed…fewer cards, and therefore fewer chances to overspend. 

Tidying up finances can be satisfying, yes, and shutting down a card might seem like an easy win.

But before cutting it up and chucking it in the bin, there’s also something that’s important to know: closing a credit card can affect more than just your wallet.

 It can also nudge your credit score in the wrong direction if you’re not careful. That score is a bit like your financial CV, and even small changes can leave a mark.

So here’s what actually happens when a credit card gets the chop…and how you can do it in a way that doesn’t trip up future plans.

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How Closing a Credit Card Can Shake Up Your Credit Score

Here’s how closing a credit card can affect your credit:

It Can Push Up Your Credit Utilisation

This one catches a lot of people off guard. Credit utilisation is the amount of credit being used compared to how much is available in total. Lenders love to see low usage because it shows control and stability.

Imagine having £1,000 of debt spread across cards with a combined £5,000 limit. That’s a 20% utilisation rate. Pretty healthy. 

Now, say that one of those cards has a £2,000 limit and it’s closed. That same £1,000 balance now sits against a £3,000 total limit. Utilisation jumps to 33%, and that could pull the credit score down a few notches.

It’s not that lenders think a closed card is bad; they just don’t like the shrinking room for financial manoeuvring.

It Might Trim Your Credit History

Time matters when it comes to credit! The longer an account has been open and managed well, the better it looks.

Closing an old credit card doesn’t immediately wipe its history off your record, though. It can hang around on credit reports for up to six years. 

But once it disappears, so does the benefit of that long-standing relationship. If it’s one of the oldest cards on file, its eventual exit could lower the average age of accounts, which doesn’t do your score any favours.

It Can Thin Out Your Credit Profile

Having a mix of credit accounts (like loans, cards, and overdrafts) shows lenders that a person can handle different types of borrowing. Fewer active accounts mean that there is less evidence to back that up.

If the card being closed is the only one open, it leaves the credit file looking a bit bare. That’s not a disaster by any means, but it does mean that there’s less for lenders to base their decisions on. 

A thinner file might not scream “risk,” but it doesn’t exactly shout “safe bet” either.

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Does Closing a Credit Card Always Cause Trouble?

Not always. It really depends on the bigger picture.

When It’s Probably Fine…

• If there are a few other cards in play and they’re not carrying heavy balances, the overall credit limit stays strong. No big damage done.
  
  
• If the card never gets used or costs more than it’s worth, closing it could be more of a smart clean-up than a mistake.

…and When It Could Leave a Dent

• If there’s not much credit history to begin with, then shutting down one of the few accounts might have a bigger impact.
  
  
• If that card's limit is helping keep overall utilisation low, closing it could tighten things up more than expected.

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What to Think About Before Closing a Card

Here are a few things that are worth keeping in mind…

How Long You’ve Had It

Older accounts show stability. Even if that card hasn’t been used in ages, the age itself could be doing more good than realised.

Those Pesky Annual Fees

Some cards charge a yearly fee just for the privilege of having them. If the rewards or perks don’t outweigh that cost, closing it can make sense; just weigh the pros and cons first.

Perks and Rewards

Before making a clean break, it’s definitely worth checking if any points, cashback, or travel perks are still on the card. Some benefits are surprisingly valuable, and they disappear once the card goes.

Upcoming Credit Applications

Planning to take out a mortgage, a car loan, or a new credit line soon? Lenders like seeing consistency. Closing accounts right before applying for something big can make things look a little unstable.

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Smarter Moves Than Cancelling Right Away

Here are some moves that could prove to be better than simply cancelling the credit card:

Switch or Downgrade

A quick call to the card provider could offer an option to switch to a version that has no fee or fewer frills. It keeps the credit line open and the account age intact.

Drop the Limit

If the credit limit feels a bit too generous, it can be lowered instead of closed. That way the account still contributes to the credit file without feeling like a risk.

Keep It Ticking Over

Making the occasional small purchase (think monthly streaming subscriptions or takeaway orders) can keep the card active and in good standing without turning into a spending trap.

Set Up an Auto Payment

Link it to a regular bill and automate the repayment. It’s a hands-off way to keep the account alive and to also build up a positive payment history in the background.

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Closing a Credit Card the Right Way

If the decision’s made, there’s a right way to close a card without leaving loose ends behind:

1. Clear the Balance

Before anything else, pay off the full amount! A closed card with an unpaid balance can still rack up interest, which just makes life harder.

2. Cash in the Rewards

If there are any unclaimed points or perks, now’s the time to use them. Once the account’s closed, they’re usually gone for good.

3. Cancel Recurring Charges

Go through recent statements and make sure no subscriptions or bills are tied to the card. Otherwise, future charges might bounce or get missed.

4. Get It in Writing

Call or message the provider to officially request the closure, and to also ask for written confirmation. It helps avoid confusion later, and especially if the account shows up as “closed by lender” instead of “closed by customer” on the credit report.

5. Double-Check Your Credit File

After a few weeks, it’s worth pulling a credit report from Equifax, Experian, or TransUnion to make sure everything looks right. The account should be marked clearly as closed, and with no leftover balance.

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How Long Until the Credit Score Bounces Back?

Even if the score dips a little, it usually doesn’t take long to recover…just a few months is typical if everything else stays on track.

Paying bills on time and keeping other cards well below their limits and not applying for a bunch of new credit in one go all help the score rebuild quickly. 

Credit scores love routine and responsibility. A small stumble won’t matter much as long as the bigger picture stays solid.

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Pave Helps Your Credit Score Bounce Back

Building credit can be a long and difficult process, but the reward is worth it. Pave is an award-winning credit-builder app that actively works with you to help you build your credit score. No hard credit checks required. In addition, Pave will help you keep on top  of your finances by giving you personalised credit fixes, bill reminders and much more. 

Learn more about Pave and sign up today!

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