Whether you’re done with the perks or simply need a change of service, to cancel a credit card you need to pay off any balances present on the account. From here, you’ll want to make sure you obtain all rewards and perks associated with the card before completely calling it quits. This can be done by following a specific procedure — which consists of more than just taking scissors and cutting the card in two.
Here are the general steps to follow for the best way to cancel a credit card:
- Pay off any remaining balance on the card and ensure no further charges are incurred.
- Redeem any rewards associated with the account.
- Locate the credit card company’s number and call them to initiate the cancelation.
- Check your credit report to confirm cancellation.
- Dispose of your credit card.
When Should You Cancel Your Credit Card?
When dealing with finances, there are some situations when canceling a credit card is advised. Always check with your bank or financial advisor before assuming cancelation is the best option.
Canceling a credit card can be a good idea if you:
- Are experiencing a significant personal finance shift
- Have unfeasible fees associated with the account
- Are struggling with compounding debt
- Are an impulse buyer/have shopping addictions
- Are going through a divorce and have a joint account with your spouse
Should You Cancel Unused Credit Cards?
There are both pros and cons to canceling unused credit cards. Generally, people with an established, healthy credit history have fewer issues when canceling an unused card.
Annual fees, identity theft fears, or personal financial shifts are all valid reasons for canceling an unused credit card. A credit score can take a small hit when a credit card is canceled, as this potentially lowers credit history and could increase credit utilization. If you are going to need your credit run in approximately the next six months, and there aren’t any major fees with the card, wait to close until after the loan or credit check goes through.
This is also the downside of canceling an unused credit card account. If you have poor credit, ending the service will dent your credit score further, and it will look suspicious to creditors. Instead of canceling, it may be best to use the card for a few charges over the period of several months before canceling.
The Best Way to Cancel a Credit Card
In the event you must cancel your account there is a procedure to follow to mitigate any issues with creditors down the line.
The best way to cancel a credit card is to first pay off any outstanding balance on the card. Once this has been paid off, be sure to redeem any rewards associated with your account — once you cancel, it’s highly unlikely you’ll have access to any previously available promotions.
After these two steps are completed, call the credit card company.
After you do this, cut your credit card into multiple pieces and discard them into a trash/recycling bin.
Finally, check your credit report to ensure the card is off of your record.
1. Pay Off Your Balance
Paying off your credit card account’s balance helps avoid accumulating interest and late fees that can be forgotten if the account is canceled. Credit card companies may not always warn you of an open balance, but are required to do so when you call them.
2. Redeem Any Rewards
Most credit card companies offer rewards for using their services. Once your account is closed, though, these perks can get cut off. Take advantage of building credit and use any rewards you’ve accumulated before closing the account for good.
3. Call the Credit Company and Cancel
After you have weighed the pros and cons of canceling and are sure you want to move forward with the cancellation, the next step is to call the card company. Have the agent verbally confirm the termination of the account and the date it will be shut down. If you would prefer further documentation, they should also be able to send you a letter at your request.
4. Check Your Credit Report
The best way to know your account has been canceled is to check your credit report. The card should not be present as an active account on this report. This can take a credit period to reflect.
5. Dispose of Your Credit Card
Completely dismantle your credit card once you have confirmed its cancellation. Cut or shred it into pieces to ensure someone could not use it again.
With more Americans than ever turning to cashless payments, it’s essential to know how to use credit cards responsibly. Knowing how many you should have and what to do with them is an essential part of good financial health.
When it’s time to cancel your card, though, it’s paramount to follow the appropriate steps to mitigate damage to your credit score. Above all, close your account and don’t cut corners to ensure your account has indeed been canceled to avoid an onslaught of fees and extra payments — not to mention credit score damage.
For more ways to boost your credit health and to pinpoint a card with the best benefits for you, compare credit cards with Mint.
Source : feedburner.com/MyMint