When done the wrong way, cancelling a credit card can bring damages to your personal credit.
If you plan to cancel your credit card, check out the following pointers to consider:
Be certain with your decision.
It’s important to be sure that you really want to cancel. Why would you like to cancel your credit card? Is it because of the high interest rate? In that case, you may attempt to request your issuer if it’s possible for you to get a lower rate instead of cancelling. On the other hand, if you feel that you have too many credit cards and want to get rid of the others then be ready to pay your balances in full before closing your account.
Keep in mind that cancelling an account with unpaid charges can put a stigma on your personal credit history. The status of your account will be reflected in your report and can send out a negative impression to future creditors.
Make sure you’re not deleting your credit history.
Another factor to consider is the age of your credit card. If you’ve had that account for quite a long time, then closing it now could mean erasing the oldest parts of your credit history. Don’t forget that length of credit history comprises 10% of your final FICO score.
Again, you may try to work out a deal with your credit card company. Call your issuer and open up your concerns. It is always worth the effort to ask for a lower interest rate especially if you have been a long time credit cardholder and your payment history shows a clean record.
You can keep an old credit card and avoid bad credit by keeping your charges minimal. Use that card only for small purchases and pay down your balance immediately to avoid extra fees.
Cancel your credit card correctly.
If you have really decided that cancelling is your best option, then you need to do it the right way. First, check the status of your credit card account. Call up your credit card issuer to confirm that you have no remaining balances in your account.
Once you are sure that you have zero charges, tell the customer representative that you want to cancel. The representative may have the supervisor handle the call to try to talk you out of your decision to cancel. If you are certain about your decision, then simply say that your decision is final.
Ask the representative the name of the person to whom you can address your cancellation letter to. Send the letter via registered mail to make sure that it will reach your issuer. In your letter, request to have a statement in your credit report that the account has been “closed upon your (the account holder) request”. Don’t forget to keep a photocopy of your cancellation letter for your reference.
After a month, order a copy of your credit report from each of the three major credit reporting agencies to verify if your credit card account has been closed and that there is a statement that clearly proves that you volunteered to cancel.
