Credit cards are a pleasure to use but at one or another, there comes a time when it makes more sense to just cancel a card, especially when it doesn’t serve you anymore.
The next concern now is, how do you a cancel a credit card and lessen any potential damages to your credit score? To give you a good idea, here are the four steps you can take to address this concern:
- Close Your Inactive Credit Card Immediately
If you no longer use your credit card, it would be in your best interest if you can close the account right away. It is inevitable for the card issuer to close your inactive account. Letting the creditor close the account might look bad on your report and significantly lower your score.
It will be better if you show that you are in full control of all your financial decisions by listing your account as “closed at customer support.” Take note that closing your oldest card can reduce your credit history’s overall length that can affect your credit score.
- Transfer Outstanding Balance
You wouldn’t want to close your card right way if you are still carrying a balance. This will skyrocket your credit utilization ratio that can make your credit score plummeting in no time. Aside from that, the card issuer may also opt to increase your interest rates to highest amount as what the law allows. With them losing you as their customer, they might attempt getting as much money from you as possible.
In case it is impossible to pay off your balance immediately, your balance can be transferred to a new credit card. Always do your research first to find the right card that will fit your plans and budget. You can also open another card with the same credit limit for your credit utilization to remain just the same.
- Go Online or Make a Call to Cancel Your Old Card
When the card balance reaches zero, you can now use the online messaging center of the credit card company to send an email then close off the account. However, it is always best that you contact the number found at the back of the credit card. It doesn’t matter if you cancel your card by mail or phone. Make sure you follow it up with the certified letter that announces your request for closing the account.
- Review Your Credit Report
Avoid taking the word of the card company for it. Ensure that your creditor had your decision reported to all the three major credit bureaus. Take note that the account must be labeled as “closed at customer request.”
Additional Tip: Destroy Your Card to Avoid Fraud
Once you are sure that your account has been closed, now is the time for you to get rid of your card for good. It is ideal to run your card through the paper shredder meant for plastic and discard the pieces. If a shredder is not available, use as pair of scissors to cut up your card and dispose the pieces in several separate garbage bags to completely separate the name and numbers.