Before you close a card, make sure you review your credit history to see how it will be affected. By simply requesting your credit score, many issuers will provide it for you free. There are also numerous websites that offer free credit scores. Although they may not be as precise as FICO scores, these scores can give you an indication of where your credit is at.
Close inactive or infrequently used credit card accounts
Credit cards are an important tool in your financial planning, but they can become unusable at times. Maybe they have high annual fees, high interest rates, or rewards that just aren't enough. No matter the reason, it is important to understand how closing them can affect your credit score and how you can handle it.
You can lower your FICO Score by closing a credit-card account. It's a wise decision to carefully consider whether closing an inactive or infrequently used credit card is in your best interest. While closing an inactive credit card won't make your credit score better, it can decrease the temptation to make unnecessary fees.
You should first find a better way to use an inactive credit card. Open an online shopping account with the card that is infrequently used. This will allow you to make small purchases each month and pay the card off before your next billing cycle. This strategy will help keep your credit limit at a high level while demonstrating responsible credit usage.
Cancel cards with 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. Be sure to verify that your account balance is zero before closing it. If you do not, residual interest may accrue on your account. You may also need to spend a lot of time and effort closing your account.
It can take several months for your credit report to reflect the cancellation. It doesn't matter how you cancel your card, you should get written confirmation from it. This way, you can keep track of when your account was closed. If you do not, you might be charged extra fees.
If you're unsure whether you should cancel your credit card with an unpaid balance, it is best to consult a professional financial advisor. In some cases, canceling a card with a balance is the best solution for a creditor who can't make payments.
Cancel cards with low balances before closing
Your credit card provider should be contacted before you close your account. You'll need tell your credit card provider you would like to cancel the card and confirm that there's no balance. Otherwise, residual interests will begin accruing after payment is made. They may need to be contacted to discuss a reward or new rate.
To cancel your creditcard account, contact the creditor and request written confirmation from them that the account balance has been $0 before closing it. After cancelling the account, you should check your credit report within 30 to 45 days. It should show that you've closed the account and the balance is $0, but if the balance is still listed, you'll need to open a dispute with the credit bureaus to have it removed from your credit report.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will keep you from regretting costly purchases later. Similarly, if you're working through debt management, closing a joint credit card will allow you to focus on paying off other debts.