7 Tips For Closing A Credit Card
View as article

Do Your Research



1. Clear the Balance

If you are carrying a balance on a credit card, you can't close the card without first clearing the balance. You can do this the old-fashioned way, which is the best way: pay off the balance. If you can't afford to pay the card off, you can transfer the balance to another credit card, preferably one with a lower interest rate.

2. Read the Fine Print

Check your card holder's agreement for closing procedures and possible penalties before you make the call. If you've opened the card recently, you may find that there is a charge for early closure.

3. Collect Outstanding Rewards

Generally, any rewards (such as points or airline miles) still technically belong to you even after you close the credit card. But the wise person will collect before closure. If you're not up to a certain amount of points or dollars earned to collect your reward, decide if it's worth it or not to hang on to the card until you reach that amount. If the reward is only worth $50, but you'll be shelling out $100 a month in extra interest, cut your losses, pay off the card and close it.

4. Cancel Automatic Payments

Before you cancel your account, log onto your bank's website and cancel any automatic bill payments or transfers you have set up to go toward the credit card. If you don't do this, you'll have payments go through on a $0 balance; which might actually result in additional fees or time-consuming paper work.

5. Change Bill Payments

Look over the last statement from your card before canceling. Do you have any recurring bills or charges set up with this card? Before you cancel, go change those methods of payments so you won't have last-minute charges appearing when you thought you'd cleared the balance, and also so you won't find yourself with interrupted services or non-payment fees because your credit card (now closed) didn't work anymore.

6. Call, Cancel and Get an Effective Date

Look on your credit card statement for the customer service number to call. In many cases, there will be a separate number to call for closures or issues with your card. Be prepared for a conversation with an employee who has been trained to try to talk you out of closing your credit card. Just answer any offers or questions with your bottom line: "No, thanks, I want to close the card." Ask for the date when the closure will be effective, and clarify if there are any outstanding finance charges that will come through before the closure date. Don't assume that closure is effective immediately. If there will be finance charges, ask if you can go ahead and pay them over the phone. You can also send a letter requesting closure and save yourself some time on the phone.

7. Get Confirmation in Writing

When you call to cancel your card, request that the credit card company send you a confirmation letter with the request for closure and the effective date of closure on it. Be sure to keep this letter for your records. If you have a credit report done (which is a good idea to do annually) and notice that this credit card still shows up, you'll have your proof, in writing, that you did indeed close the account and the credit card company did not follow through.

The Bottom Line

It's a good idea to get a credit report several weeks after you've closed a credit card, and especially if you've closed more than one, just to be sure that everything has gone through as it should have. The sooner you check up on this, the easier it will be to deal with anything that might come up. Remember that open credit cards affect your credit score, even if you don't carry a balance on them, so get rid of that deadweight while you start the new year.
comments powered by Disqus