You should review your credit history before you close a credit line. Also, consider how the closure will affect it. Simply request your credit score from any issuer and you can get it free of charge. There are also numerous websites that 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.
Credit cards that are inactive or not used often should be closed
Although credit cards can be a useful financial tool, it is possible that they will eventually become ineffective. They may have high annual fees or high interest rates. Or they might offer rewards that aren't sufficient. Whatever the reason, it's important you understand how closing these accounts will impact your credit score. Also, how to handle this change.
Your FICO Score can be affected by closing a credit card account. You should carefully consider whether closing an inactive credit card or one that is not used often is in your best interests. Closing an inactive account doesn't improve your credit score, but it can reduce the temptation to make unnecessary charges.
You should first find a better way to use an inactive credit card. You might open an account for online shopping with the infrequently used credit card. You can then make small purchases once a month and pay off the balance before the next billing cycle. This will allow you to keep your credit limit high and show responsible credit usage.
Cancel cards with a outstanding balance
First, contact the credit card company to cancel credit cards with outstanding balances. You should be able call customer service to cancel your credit card. But, before you close the account, confirm that your balance is at zero. If you do not, residual interest may accrue on your account. Closing an account can take considerable time and effort.
It can take several weeks for your credit report and bank statements to reflect the cancellation. It doesn't matter how you cancel your card, you should get written confirmation from it. This allows you to keep track if your account has been closed. You might end up paying additional fees.
If you are unsure if you should cancel credit cards with outstanding balances, you can consult a financial adviser. If a creditor is unable to pay the monthly payments, sometimes canceling a card with an outstanding balance may be the best option.
Cancel cards with a low balance before closing
Your credit card provider should be contacted before you close your account. Tell your credit card provider that you want to cancel your account and verify that there is no balance. Otherwise, residual interest may begin to accrue after the final bill. 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. After cancelling the account, you should check your credit report within 30 to 45 days. The report should indicate that the account has been closed and that the balance is $0. If the balance remains, you will need to file a dispute with credit bureaus in order to have it removed.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will help you keep from making purchases you'll regret later. If you are working on debt management, closing your joint credit card will help you to concentrate on paying off other loans.