How to Close a Credit Card Account

Cancelling credit cards: It is normal for you to want to cancel a credit card account at some point in time. You may have initially gotten a credit card to receive a special discount, to establish credit, or to have emergency cash when needed.

Whatever the reason, you want to make sure that you close and cancel your credit cards without harming your credit. There is a correct and incorrect way to go about closing accounts and cancelling credit cards.

How to Close and Cancel Credit Card Accounts

Before you cancel a credit card, make sure that you are absolutely through using it. If this is a card that you use from time to time, you may want to consider cancelling another credit card instead. Here are a few easy steps to cancelling and closing a credit card account:

1. You should pay the balance before closing and cancelling the account. Closing an account that has an unpaid balance does you no good. You are still responsible for paying the balance, and your credit score does not improve because you still owe on the account. Additionally, credit card companies may raise your interest rate as a penalty for cancelling the credit card. The institution has a right to raise your interest rate to the maximum rate allowed by law if you try to cancel the card with an unpaid balance.
2. Contact the credit card institution by phone. You should speak to someone in person to let them know that you wish to cancel the credit card and close the account. Write down the name and identification number of the person you speak to about your account. Request a copy of all documentation that proves that this account is closed and paid in full. Stay in touch with the credit card company as needed until the issue is resolved.
3. Follow up with the credit card company in writing. Write the letter directly to an individual if possible. Many credit card companies have a special department that handles the process of closing an account. Write a short letter to this individual requesting to close the account. It may also be beneficial to request that the individual place a notation on your account that states that you requested the closure of the account. Provide your account number, name, and address within the letter. Use a return receipt request or certified mail to send your written request. This method provides proof that the credit card company received the letter.
4. Request a copy of your credit report from the three credit agencies. It may take up to 30 days for the credit report to reflect that the account is closed. It is common that your credit reports may not all reflect the same information. Do not rely on the information of one credit report to prove that the account is closed. Make sure that the credit card company reports that you closed the account, because if not, it may reflect negatively on your credit.
5.  Repeat this process if you find inaccuracies on your credit report. If the credit card company reports information inaccurately, contact the customer service department and start the process again. Request that the company correct the information by contacting the company by phone and in writing. Check your credit report periodically to make sure that the information is correct.

Tips on Closing a Credit Card Account

Before you make the decision to close an account, make sure that you understand that closing some accounts may hurt your credit. The following are a few accounts that you should never close:

• Your credit cards with available credit. Closing these accounts decreases your available credit, and your credit utilization increases.
• Your credit cards with available balances. Your credit cards with balances lower to $0 of available credit when closed. When this information is reported to the credit agencies, it appears that you maxed out the credit cards. 30% of your credit score is determined by the amount of debt you owe. If you do not want to harm your credit, you should not close cards with available balances.
• This credit card is your only credit card. Your credit score is determined by the various types of credit you have. Without a credit card, future creditors may decline your request for credit because you do not have enough established credit.
• Keep your credit cards with excellent terms. Any credit cards that offer no annual fee and low interest rates are worth keeping. When your receive benefits for spending money, this is a credit card worth keeping around.
• Keep your oldest credit card. It may not have an immediate impact on your credit, but down the line, you may see a drop in your credit score. Closing this account shortens your credit history and credit issuers see you as a risky borrower. Closing this account shortens your credit history.

Weigh your options before making a decision to close and cancel a credit card. You must consider the impact on your credit score before making the choice. Only close an account if it helps your credit.