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. 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.
Credit cards that are inactive or not used often should be closed
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 you understand how closing these accounts will impact your credit score. Also, how to handle this change.
Closing a credit card account can lower your FICO Score. You should carefully consider whether closing an inactive credit card or one that is not used often is in your best interests. 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.
You should first find a better way to use an inactive credit card. You might open an account for online shopping with the infrequently used credit card. You can make small purchases over the course of a few months, and then pay them off in 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. Contact the customer service representative to cancel your account. But, before you close the account, confirm that your balance is at zero. You could find that residual interest is accruing to your account. You may also need to spend a lot of time and effort closing your account.
It can take several weeks for your credit report and bank statements to reflect the cancellation. It doesn't matter how you cancel your card, you should get written confirmation from it. This way, you can keep track of when your account was closed. A failure to do so could result in additional charges.
If you aren’t sure whether to cancel a creditcard with an outstanding balance, consult a financial professional. If a creditor is unable to pay the monthly payments, sometimes canceling a card with an outstanding balance may be the best option.
Cancel cards that have a low balance prior to closing
Be sure to contact your credit provider before you close your credit-card account. Tell your credit card provider that you want to cancel your account and verify that there is no balance. If you don't, residual interest will begin accruing after your final bill. It is possible to reach them to ask about a reward program or a new rate.
To cancel your credit card account, contact the credit card issuer and ask for written confirmation that the account balance is $0 before closing it. Check your credit report between 30 and 45 days after you cancel 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.
You may need to close your joint credit card if you are going through a divorce. This will prevent you from regretting later purchases. Similar to the above, if your goal is to manage debt, closing a joint card will let you focus on other debts.