Before you close a card, make sure you review your credit history to see how it will be affected. By simply requesting your credit score, many issuers will provide it for you free. There are many websites that provide free credit scores. The free credit scores might not be as accurate or as the FICO scores but they will give you an idea of your credit score.
Close down inactive or infrequently used credit cards
While credit cards can serve as a financial tool, sometimes they need to be stopped. Maybe they have high annual fees, high interest rates, or rewards that just aren't enough. It doesn't matter what the reason is, it is crucial to understand how closing them affects your credit score and how to deal with the change.
The FICO Score may be lower if you close a credit account. It is a smart decision to consider whether closing an account that is inactive or not used frequently is in your best interest. Although it won't increase your credit score or reduce the temptation to make excessive charges, closing an inactive account can help you lessen that temptation.
If you want to close an inactive or infrequently-used credit card, first consider a more efficient way to use it. Consider opening an online shopping account using the infrequently used card. This way, you can make small purchases every few months and pay them off before the next billing cycle. This will allow you to keep your credit limit high and show responsible credit usage.
Cancel cards that have an outstanding balance
First, contact the credit card company to cancel credit cards with outstanding balances. Contact the customer service representative to cancel your account. However, be sure to confirm that the balance on your account is zero before closing the account. Otherwise, you may find residual interest accruing on the account. A closing of an account could take significant time and effort.
Your credit report can take many months to reflect the cancellation. Regardless of how you cancel a card, make sure you get a written confirmation from the issuer. This way, you can keep track of when your account was closed. You could be charged additional fees if you don't.
If you are unsure if you should cancel credit cards with outstanding balances, you can consult a financial adviser. For creditors who are unable to make their payments, it may be a good idea to cancel a card that has a balance.
Cancel cards with a low amount before closing
Before you close your credit card account, make sure to contact your credit card provider. You'll need tell your credit card provider you would like to cancel the card and confirm that there's no balance. If you don't, residual interest will begin accruing after your final bill. They may need to be contacted to discuss a reward or new rate.
Contact the credit card issuer to cancel your credit card account. Your credit report should be checked between 30-60 days after the account is closed. It should say that you have closed the account, and that there is no balance. If it still shows $0, you need to file a dispute to remove it from your credit reports.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will allow you to avoid regretful purchases. A joint credit card can be used to help you pay off other debts if you are trying to manage debt.