Canceling Credit Cards – What to Consider Before Taking this Approach
A credit card can be a terrific asset to have. However, you can easily find yourself dissatisfied with your credit card company for many reasons. When this occurs, it is often an enticing approach to close the account and move on to a better offer. Is this the best approach to take? Here are some things to consider:
Canceling
A lot of people cancel their credit cards and do so for various reasons. A smart person who knows they can not afford more debt but can not trust themselves not to get in over their heads might cancel and pay off the remaining debt to preserve their credit as is until their financial situation is improved. others may not like the sudden changes in terms and conditions, such as higher rates, lower credit limits and an added annual fee. Some just might not like the service or the perks they are getting and decide to look for something else that better meets their needs.
Another good reason to cancel an account is that you have far to many credit cards or have opened another account and want to reduce your debt as much as possible.
However, cancellation may not always be the best route to take.
Reasons Not to Cancel
If you have a large purchase looming in your future, you might want to hang onto those cards, keeping their balances low. Lenders like to see plenty of available credit in your name. This could improve your chances of getting a great rate on financing for a home, car or other major purchase.
An older line of credit is going to look much better than a newly opened one. As long as the line of credit has been established for a length of time and has no negative marks, you really should consider keeping that credit card.
How to Cancel
If you do decide you need to cancel a credit card, don’t be hasty about it. Make a plan and do it in steps in order to maintain your credit rating.
First, put that card aside and stop using it. Pay off all the debt owed on it, even if it takes you a bit of time. By not using it, you are not incurring any new debt. Try to pay it off as quickly as possible, especially if your card carries an annual fee. You want the debt paid and the card canceled before you have to pay that fee again.
Once your debt is paid in full, call the company about your wish to close the account and cancel the card. However, do not leave it at that! Send the company a certified letter as to this intent as well, and be sure to keep a copy for your own records. Request confirmation from your credit card company and check your credit report. Make sure the account is marked as closed within 30 days. If not, call the company and insist that his be done.
There are many good reasons to cancel and many good reasons not to cancel. If you feel you must cancel an account, for whatever reason, be sure to do it the right way and keep an eye on things to protect your good name.
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