Ideal way to cancel a credit card

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The proper way to cancel a credit card.

If you have multiple credit cards and have one that you do not need or use anymore, it may be a good idea to cancel the credit card. Canceling a credit card eliminates the temptation to spend the available credit. It also gets rid of the risk of someone stealing the account information of a rarely used credit card without you knowing.

A word of warning before you cancel a credit card:

Part of your credit score is determined by the amount of available credit you have compared against the current amount of credit used. This is across all accounts. For example if you currently have 3 credit cards each with a $6,000 limit and card one has a balance of $4,000, card two has a balance of $5,000, and card three has a balance of $0 you have $9,000 in credit used up out of $18,000 in available credit. Canceling the $0 balance card changes this ratio to $9,000 used out of $12,000.  You go from using  50% of your credit to 75% in the eyes of the credit card companies and the reporting agencies.

How to best cancel a credit card without hassle:

Pay off any balance on the credit card that you want to cancel. MSN’s MoneyCentral warns that issuers will sometimes raise rates as soon as they know you want to close the account; so they can earn more on the balance while you pay if off.

So, you need to pay off the balance before you let the card issuer know that you want to close the account. You will also want to redeem or cash in any rewards racked up on the card before you cancel.

Call the number on the back of the credit card and tell them you want to cancel the card. You may be directed to an automated prompt that allows you to easily cancel. Or, you may speak to a representative who may try to offer you discounts, bonus rewards, or discounted interest rates or transfers to keep you as a customer. Decline and insist you would like to cancel.

Verify on the phone that the card’s balance is at $0 before you cancel. If it is not, pay the balance before you ask them to cancel the card.

Cut up or shred the card and any cards that were linked (authorized users) to the account. Be sure to change any online or automated bill payment services that may be linked to the account to other  credit cards or payment methods.

Type up a follow up letter to the credit card issuer after a week or two and mail it to their customer service center. Be sure to include your name and the account number. Simply state that you are writing to confirm the account was closed. Include your contact information.

Check your credit report a month or two after closing the account to verify the account is listed as closed and to check for any unauthorized activity. You can get a credit report from the credit reporting bureaus or a yearly free one through: .



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