Before you decide to close a credit card, you should take a look at your credit history and how it will be affected by the closure. You can obtain your credit score for free from many issuers by simply requesting it. There are many websites that provide 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 down inactive or infrequently used credit cards
Although credit cards can be a useful financial tool, it is possible that they will eventually become ineffective. Maybe they have high annual fees, high interest rates, or rewards that just aren't enough. Whatever the reason for closing them, it is important that you understand how they will impact your credit score as well as how to manage the 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. Although it won't increase your credit score or reduce the temptation to make excessive charges, closing an inactive account can help you lessen that temptation.
An inactive or infrequently used credit account should be closed. If the card is not used often, you might consider opening an online shopping bank. You can then make small purchases once a month and pay off the balance before the next billing cycle. This strategy will help you keep your credit limit high while showing responsible credit usage.
Cancel cards with outstanding balance
First, contact the credit card company to cancel credit cards with outstanding balances. Your account should be cancelled by customer service. Be sure to verify that your account balance is zero before closing it. In this case, there may be residual interest. It may take a lot of effort and time to close an account.
It may take several months for credit reports to reflect the cancellation. No matter how the card was cancelled, be sure to get a written confirmation. You can track when your account was closed. You could be charged additional fees if you don't.
Consult a financial advisor to determine if you should cancel a credit line with an outstanding balance. A card with a current balance is sometimes the best solution for creditors who cannot make payments.
Cancel cards with a low balance before closing
Before you close your credit card account, make sure to contact your credit card provider. You will need to inform your provider about your desire to cancel the account. Otherwise, residual income will accrue following the final payment. Contact them to inquire about a higher rate or reward program.
Contact the credit card issuer to cancel your credit card account. 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.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will prevent you from regretting later purchases. A joint credit card can be used to help you pay off other debts if you are trying to manage debt.