Older credit is better than new credit when it comes to credit score
Cancelling a credit card with a long history of punctual payments can also be damaging to your credit score! If you’re looking to apply for a loan anytime in the near future, consider cancelling recently acquired cards instead.
If you don’t already know, the average age of your credit card accounts affects your credit score. A credit card that you’ve had for a long time helps your credit as long as you keep it open and in good standing.
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When does cancelling a credit card make sense?
#1 The card has high annual fee and you don’t use the rewards
In an ideal world, savvy credit card users seek to make each dollar they spend go further with the rewards they can potentially earn. If your card has a high annual fee but you haven’t been looking for ways to utilise your rewards, perhaps consider cancelling the credit card. It’s just not worth it to pay the high annual fee!
#2 You struggle with overspending
Have a tendency to max out your credit cards? Consider closing a credit card account or two. Out of sight, out of mind.
#3 You want to renew eligibility for sign-up bonuses
Banks reserve their most generous gifts and sign-up offers for new-to-bank customers. Take a look at the exclusive offers and gifts available on SingSaver if you need more convincing.
When does keeping my credit card account open make sense?
When it comes to credit score, the duration you’ve had your credit card account open and in good standing matters. In general, a high average age for your credit card accounts can help to improve your credit score. Therefore, it makes sense to keep your credit card account open if it is the oldest or one of the oldest accounts you have!
If you don’t have many other credit card accounts open to begin with, you might want to consider keeping your credit card account open as it prevents your credit utilisation ratio from increasing drastically, even if you keep your spending consistent.
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How to ask for credit card annual fee waivers
If you don’t try, you’ll never know. In fact, it pays to be a little brazen when it comes to asking for credit card annual fee waivers — some banks even make it easy (and quick) for customers to get their credit card annual fee waivers!
To give you a leg up, here’s our comprehensive guide to asking for credit card annual fee waivers from major banks in Singapore, such as DBS, OCBC, UOB, Citi, HSBC, SCB and more. It could be as simple as dialling in and pressing a few buttons.
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Things to do before cancelling a credit card
#1 Pay off all outstanding balance
Your outstanding balance doesn’t just include whatever appears on your most recent statement; there may also be pending amounts that have yet to be posted to your account.
Why should you clear your credit card bill in full? Well, you don’t want to be in a situation where these ‘forgotten’ charges are left as black marks in your credit report.
#2 Redeem your rewards
Before you cut your credit card, be sure to check for existing rewards points, cashback or miles. Don’t forfeit the credit card rewards you’ve accumulated — you’re entitled to utilise them!
#3 Update your billing instructions
Have the habit of charging recurring payments to your credit card? This tip is for you.
The cancellation of your credit card will automatically result in the discontinuation of these recurring payments. To avoid being stuck in a sticky situation with unpaid bills, definitely reset your recurring payment schedule(s) with another card right away.
Read these next:
How To Ask For Credit Card Annual Fee Waivers
4 Types Of Credit Cards With Lifetime Annual Fee Waivers
What Really Happens If You Skip Credit Card Bills, Loan & BNPL Payments
5 Ways to Get the Highest Credit Score in Singapore
Building A Credit Score Early Is Important, Especially If You’re A Young Working Adult. Here’s Why And How.