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So, you want to call it quits with one or more of your credit cards. Maybe it’s the crazy annual fee you no longer wish to pay, or you want to simplify your finances by letting some of the cars go. Or perhaps you have found a different card guaranteeing more value and a lower interest rate. Whatever the case, wait! Do not just cancel that credit card. Seek the services of a credible debt relief program.
Here are some reasons you might consider taking this step and what to do before canceling a credit card.
Reasons to Close Your Credit Cards
Sure, it is best to keep your credit cards open, even when not using them regularly. This is because closing them significantly impacts your credit records and score. But like anything else, this rule has several exceptions.
Here are some of the reasons why people cancel their credit cards:
- High annual fees
- Separation or divorce
- You are done with debt
- The card is no longer valuable to you
- Credit card fraud cases
5 Things to do Before You Cancel a Credit Card
Clear Any Outstanding Balance
Do not get this twisted. Cutting your credit will not save you from your debt. You are still responsible for your debt even after closing your credit card. It is, therefore, crucial that you clear your debt in full before anything else. This way, you will not forget to pay off any balances that can accrue penalties and interests. You can seek the services of a relief program to help you manage your debt.
Redeem Points and Rewards
If you close a rewards credit card, all unutilized points, cashback, miles, and rewards may be forfeited after closure.
Therefore, you should transfer or redeem them to avoid losing the rewards you have earned. Be sure to review the terms and conditions of your program to confirm whether you can claim your points upon closure.
If you are struggling with debt, you can redeem your points towards a statement and clear part of your balance. Alternatively, you can partner with debt management programs to help clear your balances and help you attain financial freedom from debt.
Contact Your Credit Card Issuer
Once you have cleared your balances and redeemed all points, you can start the process. Contact the bank customer service and request to talk to a representative. Ensure you have no balance before you close your account. Any outstanding balances might accrue interest right from when the bill was sent until you make your payments.
Once you have double-checked your account, you can express your desire to cancel your credit card account permanently. Make it clear that your account is being canceled upon your request to ensure that it does not appear like it was canceled by mistake.
Take note of all the crucial details, including the date and time you requested the cancellation. Additionally, take the name and any other details of the representative you spoke to and request a mailing address where you can drop your cancellation letter.
Send a Cancellation Letter
It may be unnecessary to send a lender after you have spoken to a representative. After all, mistakes happen, and you want to be on the same side. Send the cancellation letter to your credit card insure requesting that the account be canceled “under client request.” Remember to include your name and that of your representative and request a confirmation letter indicating that your account has been canceled with a $0 balance.
Check your Credit Record
It might take about a month or more to update your credit report on your closed credit card. Once you have it, ensure that reason for closure is indicated as “closed at customer request” and nothing else.
Get Rid of your Old Card
After a successful account cancellation, you can finally destroy your card. You can do this by cutting it into tiny pieces or putting it in a shredder. For metal cards, the safest way is to send them back to the bank for disposal.
By now, you know what to do before canceling your credit card. Ensure you have a healthy credit card portfolio before taking this step. After all, you do not want to ruin your credit report and score. You can then talk to your credit card issuer and request to close your account correctly.
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