3 How To Closing A Credit Card (With 14 Steps)

doylc.com - How To Closing A Credit Card - Credit cards can be a great way to spend money, especially for large amounts, but they can also be a financial drain if used improperly. Credit card debt is one of the leading causes of bankruptcy in the United States and people should always exercise caution when using their cards. When the time is right for you to close one of your credit cards, you can get the job done by reaching out to the right people and going through with it.

Decision to close a credit card

1. Determine which map to close. Think about why you are considering closing the credit card. It may have higher fees than other cards, be specific to a store you no longer shop at, or it may simply go unused. Whatever the reason, make sure you want to close this map. Closing a credit card account can be a somewhat tedious process and can temporarily negatively impact your credit score, so don't make these decisions lightly.

Also, be careful not to close all your credit cards. In theory, this would limit your ability to borrow, but certain situations call for instant credit. You should have a solid financial plan and a large contingency fund to avoid debt and high-interest loans. You wouldn't want to have to take out a high-interest loan when you could have used your card.

2. Make sure you close the cards with higher interest rates. If you want to narrow down your credit card collection, close out the cards with higher interest rates first. It makes sense to keep these cards with good benefits, but paying exorbitant interest rates when you have a choice is a bad idea. The same applies to credit cards with high fees. Identify these cards and cut them out first.

3. Find out how long this card's account information will appear on your credit report. Even after a credit card has been closed, the account information stays on your credit report for some time. Due to specific credit reporting laws, a credit card account in good standing (minimum amount paid, no missed payments, etc.) will remain on your report for ten years, while a negative report will remain on file for seven years.

4. Find out how closing this card will affect your credit score. Closing a credit card account can affect your credit score in a number of ways. The effects of such an approach are generally not seriously credit damaging; In some cases, however, they can cause your credit rating to deteriorate briefly. Remember that closing a map will never improve your score. Closing a map can affect your score in the following ways:

Reduce your account variation. Credit bureaus use a metric that measures how many sources of credit you have and how diverse they are (mortgage, car loan, credit card, etc.). Closing a credit card can decrease this measurement.

Average account age reduction. Another metric used by credit bureaus measures how long you have held certain accounts. If you choose to close an older credit card, the average age of your accounts may decrease, causing your credit score to decline.

Reduce your credit utilization rate. Finally, reporting agencies use a metric called "credit utilization rate," which measures how much credit you have and how much you use. A lower rate is favorable, but closing a card can increase it significantly. This is a very important factor in determining your creditworthiness. So think about the impact this could have.

5. Be mindful of your timing. As previously mentioned, closing a credit card can result in a temporary drop in your credit score. If you're planning to make a large purchase like a car or house in the near future, consider waiting to close your credit card after you've made that purchase. Your temporarily lower credit rating could make your big purchase even more expensive by securing you a higher interest rate on the loan.

Contacting your lender

1. Make sure you paid off the balance. Never try to close a credit card if you still owe money on it. If you want to get rid of a card, stop using it and cash out before closing the account. You can do this the same way you normally pay your credit card bill. This can be done online or by writing a check for the amount owed and mailing it to your credit card company along with a copy of your bill.

2. Redeem rewards before you close your card. Before you close your card, check online or call your lender to verify you have any outstanding award balances on your card. You don't want to miss out on potential cash or travel rewards. However, in some cases this may be unavoidable as the rewards may be limited to a specific time of year or value limit that you have not yet reached. Take advantage of these rewards whenever possible, then move on to the next step.

3. Call the 1-800 number on the back of your card to contact the Customer Service Department. You may have to wait in line for a while, but this is by far the best way to confirm with someone that your credit card is indeed closed. Tell the company's customer service representative that you need to close your card and be prepared for his attempt to stall and convince you to keep your card. However, hold on and stick to your original intention.

You can also find your lender's customer service number on your bill and online.

4. Write down all the information you get when you speak to the customer service representative. Record your contact with the credit card company. Most companies will give you a service or phone number. Write this in addition to the time and date you spoke to the customer service representative. For additional insurance, write down the agent's name and employee number (this is also fairly common).

5. Be steadfast. Your credit card company may try to make you an offer to persuade you to stay. Remember, if an offer sounds too good to be true, it probably is. Stick with closing your account if you wish.

Alternatively, you can try negotiating lower interest rates and fees with your provider. In some cases, they may agree to these terms in order to keep you as a customer.

Tracking

1. Write a letter to the credit card company confirming your intention to close the account. This is for your own records as well as closing the account. Sending a letter will complete the closure of your account and will provide you with a legal written and dated record of your action should anything go wrong with the closure of your account. If you really want to guarantee full legality, send the letter by registered mail and keep the receipt that you will receive after paying for the registered mail.

In your letter, request written confirmation that the account will be closed. Make sure to also include your information such as your name, phone number and address.

You may also want to include proof of payment if you have paid out your remaining balance. Do this by enclosing a canceled copy of the check.

You can also request that your credit report state that your card was closed "at the request of the consumer." This will make the situation clear for future lenders.

2. File the letter in your records. Make a copy of the letter and keep it in a safe place. That way, you have full and reasonable proof that you closed your credit card account. Also, be sure to keep the enrollment receipt. This helps prove that the credit card company received your letter.

3. Wait a few weeks and then contact your lender for confirmation. A few weeks later, check if your account is indeed closed. Businesses can occasionally make mistakes and not close your account. The closing process can take up to a month. So don't worry if it hasn't closed after a few weeks. However, if your account hasn't been closed after a month, it's time to take action.

Once the closure is confirmed, slash your credit card to complete the closure.

You can verify whether or not an account has been closed by obtaining a copy of your credit report.

4. If necessary, file a complaint. Check your credit report a month after you first call to have your card closed. If the card is still active, it's time to take further action. First, try calling your credit card company again and writing another letter. Wait for an answer. If that fails, you can file a complaint through a credit reporting agency (either Experian, TransUnion, or Equifax). Each agency's website has clear instructions on how to do this. If your account is still open after this, you may file a complaint with the Consumer Financial Protection Bureau at http://www.consumerfinance.gov/Complaint/.