| Cancel Credit Card Account |
| By Credit Federal |
Published
08/1/2008
|
Credit Card
|
|
|
|
|
Before you cancel credit card accounts, first decide which is the best credit card to keep open.
Some cardholders; unable to control purchase habits, choose to close credit card accounts to prevent further debts. Such action; of course, does not likewise cancel the debt obligation, and it may impact your credit score. To protect your credit, you should not close out the following credit card accounts:
- A credit card that still has an unpaid balance. Closing a credit card that has a balance will lower your total available credit limit to $0, and the fact that you still owe money to the issuer makes it appear you're maxed out. Debt makes up 30% of your credit score, so a maxed out credit card or even one that appears to be maxed out can harm your credit score.
- A credit card that is the only one you have with an available line of credit. When you close the card you will reduce your available credit limit, which can also lower your credit score. Likewise, if you have only one credit card to begin with, it should not be closed. If you close out your only credit card, when you apply for another one later the issuer will likely see that you have no active credit cards and may consider you a high risk.
- A credit card that's been with you the longest. The oldest credit card will give a longer history of your credit. Typically, creditors consider applicants with short credit histories as a higher risk than those with longer term histories.
- A credit card that offers you the best rewards and low interest rates. Keep a credit card with the lowest interest rate, less fees and offers benefits like cashback.
Even if you obtained a 0 interest balance transfer credit card offer, transferred all your debt to that new card and no longer need your other cards, cancelling the unused accounts will likely lower your credit score. If you cannot control your spending urges, cut up the unused cards but keep the accounts open.
If you're the victim of identity theft and fraud, creditors may advise you to close a credit card account to prevent further damages to your credit.
How to close a credit card account: Send a written letter to the card issuer to close the account, and request written confirmation that the account was closed, and was closed in good standing. That way, if you apply for credit and the creditor questions the closure you can prove it was closed in good standing.
Read other credit card related resources, including credit card debt consolidation, counseling, chargeoffs and how to negotiate debt settlement.
|
Related Articles
Email this article to a friend - click here
Webmasters: Free Credit Content for Your Website!
Multiple ways to use our financial content:
*) You can use our RSS Feeds for automatic insertion and updates
*) You can simply link to this article
