If you are trying to reduce your credit card debt, you may be tempted to start cutting up your credit cards. However, this is not the best option for properly closing a credit card account. To begin with, there may be unaccounted for charges on your credit card. Left unpaid, these can result in late fees and even collection agency notices. Such oversights are not only costly but may also negatively impact your credit score.
How, then, do you properly close a credit card account? Here are 10 simple steps to ensure the smoothest account closing possible.
1. Assess the costs and benefits of your current credit cards. Which cards have the highest APRs, fees and other costs? Do any cards offer benefits such as cash back or airline miles? Close those credit cards that are the least beneficial or the most expensive to maintain.
2. Pay off your balance in full. Do not continue using that credit card just because it is now “clean.”
3. Wait at least one billing cycle after you pay off your credit card before you close it. When the next billing cycle starts, check your credit card statement to make sure that the balance is indeed zero. Sometimes there may be leftover charges, interest and fees that still need to be paid off.
4. Obtain the customer service phone number and mailing address of the credit card issuer. This information is usually printed on your billing statement.
5. Make the call. Most credit card companies require that you call them to cancel a credit card. Set aside at least 20 minutes to properly cancel your credit card.
6. Maintain your resolve. The credit card customer service representative may try to dissuade you from closing your account. You may be offered a lower interest rate, additional rewards, etc. If the only reason you are closing your credit card is because of its high interest rate, you could use this occasion to negotiate better terms.
7. Obtain written confirmation. Request that the credit card issuer send you written (or e-mailed) notification of your cancellation. Also obtain the name of the agent you spoke with and a cancellation number.
8. Define the reason for the cancellation. Request that your credit report state that the credit card account was “closed at the consumer’s request.” Some agents may not input the correct reason for your credit card’s cancellation, resulting in your credit report stating that a credit card was closed at the issuer’s request.
9. Check your credit report. Once a month has passed, obtain a copy of your credit report. Look over the portion of the credit report that mentions your closed credit card. Make sure all information regarding this credit card is correct, and that the card has indeed been canceled.
10. Keep records. Maintain a file with the contact information of the credit card issuer, a copy of the final payment made on the balance, and the cancellation notice from the credit card issuer. Such information will be vital in case of future discrepancies.
If you feel that you’ve done everything necessary, yet the account remains open, the Federal Reserve can help mediate your particular situation.
