How To Cancel Your Credit Card

If you become aware that you’ve got a less than favorable credit card in your possession, or if you think you have too many cards, or if that credit card company upsets you in some way, it’s a normal impulse to want to cut the card in half, pay off the balance, and kiss them goodbye. That’s not necessarily a good idea. It’s true that having ten or more credit cards may actually hurt your credit rating, but by the time you have them, that damage is already done, especially if you occasionally miss a payment. Additionally, closing open accounts can actually hurt your credit score. Lenders take a hard look at the ratio between the balances on your credit accounts and your total available credit. If you do have debt, try to keep it to less than 30% of your available credit. Go ahead and keep those lines of credit open (but don't be tempted by untouched lines). When you close open accounts, those credit lines are no longer factored into your ratio. Thus the percentage of debt/available credit will increase, and people who evaluate your credit won’t like that. Furthermore, the longer you have a card the more it says about your good credit history going way back, so it’s especially foolish to cancel a card that goes way back. If you really do want to get rid of a particular card, there are a few things you want to consider. First, do not inform the credit card issuer of your desire to close the account until you have a balance of zero. Some credit card companies will actually raise the interest rate to the maximum allowable rate because they can, and because they have nothing to lose. Second, once the balance is zero, call the issuer on the phone and tell them that you’d like to cancel. Confirm that your balance is zero and that there are no pending transactions or fees or interest charges. Then ask them to cancel the card. At this point they may try to sweet talk you into staying. They may offer you a lower rate or some other more favorable terms. If they sweeten the pot enough, you may even want to stay. If you remain convinced that the card must go, ask to whom you can send a letter verifying your request. Make a note of the person’s name you have spoken to, and the time and date of your call. Most of the time these processes go smoothly, but we didn’t say ALL of the time. Third, notify the credit card company in writing. Include your name, address, and account number. Reference the phone call that you made. You don’t need to explain why you are canceling. Tell them that you’d like your credit report to reflect the fact that you initiated the closing of the account. Fourth, wait a few weeks and check your credit report. Verify that the account was closed at your request. If it indicates anything else, or if there is no mention of it at all, you may need to call the credit card company and ask them again to notify the credit bureau. Or, the credit bureau may have an online procedure for correcting the information. Closing an account is a tedious task, but done well you save yourself future trouble.