As you acquire a new credit card, you may want to cancel out some of your old and unused credit cards. But, there’s more to closing out an account than simply cutting your old card in half. The first step to closing an account is to make certain that your entire balance has been paid off. Closing an account with an existing balance could actually do damage to your credit score.
Once you are certain that your balance is 0, call the credit card company to verify that your balance is zero and notify them that you will be closing your account. Be aware that many credit card companies will use this opportunity to make offers that will entice you to keep their card. And, sometimes their offers can be good enough (such as free airline tickets or a lower interest rate), to make it worth your while to keep the card. If you still want to cancel the card, you’ll need to follow your phone call with a confirmation letter (sent via snail mail) again stating that you intend to close your account.
And, finally – and this step is critical – wait 30 days and get a copy of your credit report to verify that your account has been closed. In particular, pay attention to the terminology. Your report should list the credit card along with, “closed by account holder” or something along those lines. If your report says that the account was closed by the issuer, you’ll need to contact the credit bureau to have them change it. Showing closed by card issuer or bank could negatively affect your score. And, if you find that your account was not closed as requested, you’ll need to repeat the entire process again.
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