Before you close your credit card, it is important to review your credit history and see how it will change. You can obtain your credit score for free from many issuers by simply requesting it. Numerous websites offer credit scores for free. 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 inactive or infrequently used credit card accounts
Credit cards are an important tool in your financial planning, but they can become unusable at times. You might find that they charge high annual fees, have high interest rates or offer rewards that don't seem enough. Whatever the reason, it's important to understand how closing them will affect your credit score, and how to handle the change.
Closing a credit card account can lower your FICO Score. It's wise to evaluate whether closing an inactive card or one you use infrequently is in your best financial interests. Closing an inactive account doesn't improve your credit score, but it can reduce the temptation to make unnecessary charges.
An inactive or infrequently used credit account should be closed. You might open an account for online shopping with the infrequently used credit card. This will allow you to make small purchases each month and pay the card off before your next billing cycle. This strategy will ensure that your credit limit is high and you are responsible with credit.
Cancel cards with outstanding balance
The first step to cancel credit card accounts with an outstanding balance is to contact the credit-card issuer. The customer service representatives should be able to cancel your account. Be sure to verify that your account balance is zero before closing it. In this case, there may be residual interest. Closing an account can take considerable time and effort.
It can take several months for your credit report to reflect the cancellation. Regardless of how you cancel a card, make sure you get a written confirmation from the issuer. This will allow you to keep track of the date your account was closed. A failure to do so could result in additional charges.
If you are unsure if you should cancel credit cards with outstanding balances, you can consult a financial adviser. In some cases, canceling a card with a balance is the best solution for a creditor who can't make payments.
Cancel cards with a low balance before closing
Contact your credit card provider before you close your credit cards account. You'll need to tell them you'd like to cancel the account and confirm that the balance is zero. Otherwise, residual interest may begin to accrue after the final bill. It is possible to reach them to ask about a reward program or a new rate.
Contact your credit card issuer for confirmation that your account balance is $0 to cancel it. You can check your credit reports between 30 and 45 business days after cancelling the account. It should state that you have closed your account and that the remaining balance is $0. However, if it is still listed, you will need a dispute with the credit agencies to have the balance removed from credit reports.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will keep you from regretting costly purchases later. You can also close a joint credit line if you're trying to manage your debts. This will allow you more time to pay off other debts.