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Having a credit card can be incredibly useful - it can help you manage your cash flow, spread the cost of purchases and be a lifesaver when travelling.

However, some cards are definitely better than others. Having the wrong card is one of the easiest ways to build up debt

Unfortunately cancelling a card isn’t quite as simple as just cutting it in two. There are certain guidelines you need to follow if you want to avoid being penalised.

Why cancel?

You might want to consider cancelling your credit card(s) if any of the following apply to you:

• You tend to rack up debt easily
• Your card is hitting you hard with interest charges
• You have plenty of old cards you don’t use
• You have several cards and find it difficult to keep track of your spending and repayments
• You’ve signed up to another credit card which offers you a better deal

If you have little or no debt, having just one or two credit cards can improve your credit rating (so long as the reduction in your credit was down to you, not your bank!)

If you have collected as many as seven or eight cards over the years lenders may see you as having more potential to get in to debt as you’ve got more credit at your finger tips - and therefore more of a risk. Fewer cards means less temptation and more chance you’ll repay any money you borrow.

What’s more, the best credit card deals by far are reserved for those who have ‘new customer’ status. Most credit card companies see you as a ‘new customer’ if you’ve not had a credit card with them for 18 months or more - although this may vary between companies.