You may want to cancel a credit card payment for several reasons. For instance, if you are being charged a high annual fee or interest rate, it will be best to cancel it.
However, take note that cancelling a credit card may hurt your credit score, but it is not a bad idea to cancel it. So, you need to have a good reason for wanting to cancel it. Some reasons why you need to cancel your credit card have been outlined below, you can check it out.
How to Cancel Credit Card Payment
Cancelling a credit card requires more than just destroying the physical card and kicking it into the trash. Also, when you cancel credit card payments, you do not cancel the debt you owe, as you will need to pay before cancelling your credit card. So, if you want to cancel your credit, you will need to follow the procedures below to do so without any form of stress.
Steps to Cancelling a Credit Card Payment
Below are some steps on how you can cancel your credit card payment.
Check Your Credit Report
Before cancelling your credit report, you will need to check it for any errors. You can do this by ordering a free report from each of the three credit bureaus – TransUnion, Experian and Equifax.
You will have to check your credit report 30 to 45 days after cancellation to confirm that the account was closed and that the balance is $0.
Pay Off Your Remaining Balance
You should pay off your remaining balance before closing a credit card even though you can close it if you still have a balance on it. This is because, when you pay off before closing, the account will appear on your credit reports as “paid as agreed”. After paying your balance, you need to update any subscriptions and automatic payments. To a new card because these payments will not be approved when your account is closed.
Redeem Any Reward You Have
If you have any reward points you earned while using your credit card, you will have to redeem them before cancelling your credit card payment, or it will vanish once you close the card. You might also be able to transfer your points to another card or a cash-back rewards program, but that will depend on your card.
Put A Call Across to your Credit Card Issuer
After paying off your balance and redeeming your rewards, you can then start the cancellation process. you should also check your account to confirm that there is no balance before starting this process. Thereafter, you put a call to the number on the back of your credit card so you can speak to the bank representative. You then inform the representative of your intention to cancel your credit card. You will also need to take note of the date and time you spoke to the representative, the name of the representative and the mailing address where you can send a letter of cancellation.
Send A Letter of Cancellation
You also need to send a letter to your credit card issuer stating that you have cancelled your credit card. This may look old-school but you need to follow up your card cancellation process. In the letter, you need to state that you want your account to be “closed at consumer’s request”, also, include your name, phone number, account number, address, and the details of your conversation with the call representative.
Destroy Your Old Credit Card
Once your credit card has been cancelled, it is best you destroy it and you can use scissors to cut up the card. You also need to ensure that the sequence of numbers is not recognizable after you have destroyed it. Also, metal cards can be returned to the issuer.
When Should You Cancel a Credit Card Payment
Here are some instances when you need to cancel your credit card payment.
When The Card Has a High Annual Fee or Interest Rate
You can cancel a credit card if it has a high APR or high fees. Like late payment fees, annual fees, over-limit fees, overdrafts and the like. Also, if you do not use a card with a costly annual fee always, or if the interest rate is above your other cards. You should cancel it because it might be too expensive to keep in your wallet.
If You Do Not Use the Card Responsibly
If your balance keeps increasing and getting more interest. Then you may need to cancel your card so you do not incur more debt. But you have to pay your outstanding balance first.
When The Card Does Not Match Your Lifestyle Again
You will save more money for yourself if you cancel a credit card that is linked to an airline that you do not travel with anymore or a credit card with a foreign transaction fee that interferes with your travels.
If You Have Separated from Your Partner
You should cancel your credit card to avoid unwanted charges if you once had a joint account with your former spouse. This will be the best choice for you and your former partner.
When You Have Outstanding Debt
If you have an outstanding debt or you are getting a debt management plan. You will need to cancel your credit card accounts. Your credit score account may take a hit, but closing the accounts will help you regain your financial standing.
Frequently Asked Questions
How Long Does a Person Have to Cancel the Credit Card Payment?
An individual has a period of 60 days to cancel a credit card payment.
How Many Days Does a Credit Cardholder Have to Reverse a Payment?
As a cardholder, you have about 40 days to reverse a payment.
Can A Pending Transaction Be Cancelled?
You can cancel a pending transaction at any time before it is executed by the merchant. However, if the transaction is approved, you will have to contact the merchant and the bank or lender to resolve the issue.
What Happens If I Cancel a Credit Card with A Balance?
Your balance will not disappear if you cancel your credit card. You will still have to pay monthly interest on the balance. The is also a risk of hurting your credit score when you close it without paying off your balance. So, you have to close your card with a zero balance.
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