If you are looking for how to cancel a credit card, this article is for you. There are some important points you need to take note of before canceling your credit card. Read on to know what these points are and learn how to cancel your card.
When you want to cancel a credit card, you should think about the decision before you proceed with doing it. This is because canceling a card can impact your credit score and reports for a long time.
Closing a card account is always an option for people that want to use a better card or end transactions on a card they consider costly. Before you go ahead to close your card account, you should know when the situation calls for it. read on to learn more.
When to Cancel a Credit Card
Although canceling your card might affect your score, there are some factors that will cause you to cancel your card. Some of these factors are discussed below:
- You should cancel your card when you are a victim of fraud. If you have noticed fraudulent activity with your credit card, you can contact your card company to have the card canceled. In this case, when your card is canceled, your account will not be closed. Your card will only be closed and a replacement card mailed to you. This does not affect your credit score or history in any way.
- Having too many cards. When you want to reduce the number of cards you have, you should consider canceling the ones you no longer use. Having too many credit cards can land you in debt and cause you to be a victim of fraud. With this, you should close the ones that aren’t in use.
- High Annual Fees. Although there are cards with a lot of benefits and rewards, the cost may override the benefits. Having a high annual fee card may be frustrating sometimes. Sometimes the annual fee overrides the benefits of your card. With this, you should call your credit card issuer and negotiate the fees. If your card issuer is not a complaint, you can go ahead to cancel the card and close the account.
- Divorce or Separation. A divorce or separation is also a valid reason for canceling your account.
These are some of the reasons to cancel your credit card. If you are tempted to spend too much money, you can also close the account to avoid being in debt.
How to Close a Credit Card Without Hurting Credit
When you have decided to close your credit card, follow the steps below to do so:
- Pay off the remaining debt. Before you close your card account, ensure you pay your credit card balance in full. Also, you should consider completing balance transfers before you cancel the card. You don’t want to owe money on a credit card that you want to close.
- The next step is to cancel any recurring payment you have set up on your account.
- Check for any rewards you have and redeem them. This is because you don’t have rewards expire after a card account has been closed.
- The next step is to contact your credit card issuer. You can contact them over the phone or with the issuer’s website online.
- Send a follow-up letter or email to your card issuer. After canceling the card over the phone or online, it’s important to send a letter to confirm that your card has been canceled.
Having done this, you can cut your credit card. This is to ensure that no one uses the card after the account has been closed.
What Happens When I Close a Credit Card?
When you close your credit card account, your available credit limit will be lost. When your credit limit is lost, your credit utilization ratio is lowered. A high credit utilization ratio gives lenders the impression that you spend above your credit limit. Also, closing your credit card account could affect your credit score.
Can I Cancel a Credit Card with a Balance?
Yes, you can cancel a credit card with a balance. However, closing a card account does not automatically cancel the balance you owe. You will not be asked to pay the balance immediately. But you should note that interests will add up as well as the minimum amount due. In addition to this, any rewards you have will be lost and your credit score will be affected.
Can I Cancel a Credit Card Before Activating It?
Whether or not you can cancel a credit card before activating it depends on the card issuer. However, most credit card issuers will allow you to cancel the card. You can do this by calling the number on the back of your card or contacting the customer service unit.
Can I Cancel a Card Before the Annual Fee is Charged?
No, you can’t cancel a card before the annual fee is charged. When you activate your card, the annual fee is automatically removed. With this, you will be required to pay the annual fee to recover your credit limit.
Does Cancelling a Credit Card Affect my Credit Score?
Closing a credit card account can also affect your credit score. This is because the age of your accounts is considered when calculating the score. When you have a longer payment history it boosts your score. Closing your account reduces the average age of your accounts.
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