Before closing a credit card, take a look at how your credit history will be affected by the closure. Requesting your credit score can be done free by many issuers. Many websites also offer free credit scores. The free credit scores might not be as accurate or as the FICO scores but they will give you an idea of your credit score.
Close inactive credit cards or those that are not frequently used
While credit cards can serve as a financial tool, sometimes they need to be stopped. There may be high annual fees, high interest rate, or rewards that simply aren’t enough. Whatever the reason, it's important you understand how closing these accounts will impact your credit score. Also, how to handle this change.
The FICO Score may be lower if you close a credit account. It's a wise decision to carefully consider whether closing an inactive or infrequently used credit card is in your best interest. Closing an inactive account doesn't improve your credit score, but it can reduce the temptation to make unnecessary charges.
To close down an inactive or infrequently used credit card, you should first look for a more effective way to use the account. It might be worth opening an account online for the infrequently-used card. This will allow you to make small purchases each month and pay the card off before your next billing cycle. This strategy will ensure that your credit limit is high and you are responsible with credit.
Cancel cards that have an outstanding balance
Contact the credit card issuer to cancel credit cards that have an outstanding balance. You should be able call customer service to cancel your credit card. Before closing your account, make sure that you have verified that there is no balance. You could find that residual interest is accruing to your account. You may also need to spend a lot of time and effort closing your account.
Your credit report may take up to several months before it reflects the cancellation. No matter how the card was cancelled, be sure to get a written confirmation. This way, you can keep track of when your account was closed. If you do not, you might be charged extra fees.
If you aren’t sure whether to cancel a creditcard with an outstanding balance, consult a financial professional. A card with a current balance is sometimes the best solution for creditors who cannot make payments.
Cancel cards with a low amount before closing
Make sure you contact your credit card provider before closing your credit card account. It is necessary to notify your credit card provider of your intention to cancel the account. Otherwise, residual income will accrue following the final payment. It is possible to reach them to ask about a reward program or a new rate.
To cancel your credit card account, contact the credit card issuer and ask for written confirmation that the account balance is $0 before closing it. Your credit report should be checked between 30-60 days after the account is closed. It should say that you have closed the account, and that there is no balance. If it still shows $0, you need to file a dispute to remove it from your credit reports.
If you're going through a divorce or separation, you may need to close joint credit cards. This will prevent you from regretting later purchases. Similar to the above, if your goal is to manage debt, closing a joint card will let you focus on other debts.