Wondering how to close a credit card account? Read on to learn the best way to close your credit card so you can move on.
Checkout this video:
Why You Might Want to Close an Account
There are a few reasons you might want to close a credit card account. Maybe you have too many credit cards and want to simplify your finances, or you’re trying to get rid of debt. Maybe you’re concerned about identity theft and want to limit the number of places your personal information is stored. Or maybe you’re unhappy with the customer service you’ve received. Whatever your reason, there are a few things you need to do before you close your account.
You don’t use the card
One of the most common reasons people close a credit card account is that they just don’t use it. If you don’t use a credit card, you’re not really getting any benefits from having it. You’re also not building your credit history or improving your credit score.
If you have a credit card that you never use, it might be a good idea to close the account. This will help you simplify your finances and make it easier to keep track of your spending.
It’s important to note that closing a credit card account will not immediately improve your credit score. However, over time, as you use other forms of credit responsibly, your score will start to improve.
You have too many cards
If you carry a balance on more than one card, you’re likely paying way more in interest than you need to. For example, say you have two cards with balances of $1,000 and the following terms:
Card A has an 18% APR and a $90 annual fee.
Card B has a 12% APR and no annual fee.
If you only make the minimum payment each month on each card, it would take nearly four years to pay off Card A and just over two and a half years to pay off Card B. But it would cost you $1,620 in interest to pay off Card A, while it would only cost you $300 in interest to pay off Card B. So even though Card B has a higher interest rate, you’d save more than $1,300 by focusing on paying off that card first before working on Card A.
You’re trying to improve your credit score
One factor that’s used to calculate your credit score is the amount of credit you’re using compared with the amount of credit you have available, called your credit utilization ratio. When you close a credit card account, you eliminate some of your available credit, which can cause your credit utilization ratio to increase and your credit score to drop.
How to Close Your Account
If you’re sure you want to close your account, call the number on the back of your card and ask to speak to a customer service representative. You’ll need to give your name, account number, and reason for closing the account. The representative will likely ask you if you’re sure you want to close the account and may try to offer other products or services to keep you as a customer.
Call customer service
The best way to close your credit card account is to call the customer service number on the back of your card and speak with a representative. You’ll need to provide your account information and confirm that you want to close the account. The representative will likely ask you why you’re closing the account and if there’s anything they can do to keep you as a customer. Once you’ve confirmed that you want to close the account, the representative will process your request and send you confirmation that your account has been closed.
You can also close your credit card account by sending a letter to the credit card company requesting that your account be closed. Be sure to include your full name, address, phone number, and account number in the letter, as well as a statement confirming that you want to close the account. You should also include any final payments that need to be made on the account. Once the credit card company receives your letter, they will process your request and send you confirmation that your account has been closed.
Follow the instructions
It’s not difficult to close a credit card account, but there are a few things you need to do to make sure it’s done correctly.
First, you’ll need to pay off any balance on the card. Once that’s done, you can contact the credit card issuer to close the account. You can do this by phone, or in some cases, online.
When you call, have your account information handy so the customer service representative can locate your account. Once they do, they’ll ask you why you’re closing the account. Be prepared with an answer, but know that you don’t have to give one if you don’t want to.
Once the representative has all of the information they need, they’ll close the account and send you a letter confirming that the account has been closed. Keep this letter for your records.
And that’s it! Once you’ve followed these steps, your credit card account will be closed.
What to Do With the Remaining Balance
Have you recently closed a credit card account? If so, you may be wondering what to do with the remaining balance on the card. In this article, we’ll give you a few options for what to do with that money.
Pay off the balance
The best way to close a credit card is to pay off the balance in full and then contact the issuer to close the account. This will help you avoid any fees associated with closing the account and will also help you keep a positive credit history.
If you can’t pay off the balance right away, you may want to consider transferring the balance to another credit card with a lower interest rate. This will help you save money on interest charges and may also help you keep your credit history intact.
Once you’ve paid off the balance, be sure to cut up the card and cancel any automatic payments that are set up. You should also keep a record of the account closure in case there are any issues later on.
Transfer the balance to another card
One option is to transfer the balance to another card. This can be a good option if you have a card with a lower interest rate. You will need to pay attention to the balance transfer fee, which is usually a percentage of the total balance being transferred. Another thing to keep in mind is that most cards have a limited time period during which you can take advantage of a 0% APR on balance transfers. After that, the APR will go up.
Another option is to pay off the balance as quickly as possible. This will save you money in interest charges. If you are able to do this, you should stop using the card and close the account so that you are not tempted to run up the balance again.
You can also contact your credit card company and ask for a lower interest rate. If they are not willing to lower your rate, you can always shop around for another credit card with a better rate. Just make sure that you read the fine print before signing up for a new card.
After You Close the Account
You might think that once you close a credit card account, you’re done with the issuer, but that’s not always the case. Depending on your issuer’s policies, you might still have some responsibilities after you close the account. For example, you might still be responsible for paying any fees or charges that have already been incurred. You also might have to keep making payments on any outstanding balance until it is paid in full.
Check your credit report
Once you’ve decided to close a credit card account, take these steps to minimize any damage to your credit score.
First, check your credit report to make sure that the account is actually closed. Sometimes, despite your best efforts, a credit card company will only agree to close an account “for now.” If that’s the case, you want to know about it so you can continue working on getting the account permanently closed. You’re entitled to one free credit report every year from each of the three major credit bureaus, so take advantage of that right.
If the account is indeed closed, then the next step is to figure out what to do with any outstanding balance. If you have the money available, pay off the balance in full before closing the account. That way, you won’t have any lingering debt — and you won’t be charged interest on that debt, either.
If you can’t pay off the balance in full, try transferring it to another credit card with a lower interest rate. That way, you can focus on paying down the debt without racking up additional charges.
Once the balance is paid off or transferred, contact the credit card company again and confirm that the account is closed. Keep records of your conversations in case there are any issues down the road.
And that’s it! By following these steps, you can close a credit card account without damaging your credit score.
Monitor your credit score
Now that you’ve closed your account, you’ll want to keep an eye on your credit score. Credit scores can be negatively impacted when you close a credit card, especially if it’s one of your oldest accounts or if you carry a balance on another card.
The best way to monitor your credit score is to sign up for a credit monitoring service. These services will track your credit score and give you alerts if there are any changes. Some credit monitoring services also provide other benefits, like helping you dispute errors on your credit report or providing access to your credit report and score.
If you don’t want to sign up for a credit monitoring service, you can also get your free annual credit report from each of the three major credit bureaus. This will give you an idea of where your score stands and whether there are any errors on your report that need to be corrected.