You should review your credit history before you close a credit line. Also, consider how the closure will affect it. You can obtain your credit score for free from many issuers by simply requesting it. Many websites also offer free credit scores. Although the scores are not as accurate as FICO scores they can give you a good idea about your credit standing.
Inactive or rarely used credit cards should be closed
While credit cards can be an important financial tool, there may come a time when they are no longer used. 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.
A credit card account that is closed can affect 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. It won't help your credit score but it will reduce the temptation of making unnecessary charges.
An inactive or infrequently used credit account should be closed. Consider opening an online shopping account using the infrequently used card. You can then make small purchases once a month and pay off the balance before the next billing cycle. This strategy will keep your credit limit high, while also showing responsible credit use.
Cancel cards with an outstanding balance
The first step to cancel credit card accounts with an outstanding balance is to contact the credit-card issuer. Customer service representatives should be able cancel your account. Before closing your account, make sure that you have verified that there is no balance. In this case, there may be residual interest. You may also need to spend a lot of time and effort closing your account.
It may take several months for credit reports to reflect the cancellation. You should always get written confirmation from your issuer, regardless of how you cancelled a card. 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. 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 with a low amount before closing
Your credit card provider should be contacted before you close your account. You'll need tell your credit card provider you would like to cancel the card and confirm that there's no balance. Otherwise, residual interest may begin to accrue after the 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. After cancelling the account, you should check your credit report within 30 to 45 days. The report should indicate that the account has been closed and that the balance is $0. If the balance remains, you will need to file a dispute with credit bureaus in order to have it removed.
Joint credit cards may be necessary if you are going through divorce or separation. This will allow you to avoid regretful purchases. 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.