How To Close Out A Credit Card Account the Right Way
There comes a time in every credit card holders life when you decide, you know, this particular card just isn’t worth having anymore. It can be a card that was a student card when you first got it and it has a measly credit limit and a high interest rate and you need something bigger and better or it can be a sub prime card you got when you were rebuilding your credit and now that it is fine and dandy, you simply have other cards with infinitely better terms. So, how do you close out a card the right way? Here are a few tips.
First of all, you might not need to close out the card at all! Most credit card companies become extremely flexible if you call them and ask them to lower the interest rate or get rid of an annual fee or you’ll close out the account. Most card companies would rather still make some money off of you than lose it completely. If you have enough cards or you are fed up with the lack of customer service from one particular card and you really want to be done with it, here is what you can do.
Ideally, when you close your account, you will also enclose the final payment on the card. It is completely and totally possible to close an account that has a balance on it, but that doesn’t mean you don’t have to worry about that card anymore. When you close an account, all you are doing is saying to the card company that they should not authorize any further charges on the card. If that account has a balance on it, you must still pay it off just like always. If you neglect it, negative feedback can be sent to your credit report that can seriously damage your credit.
But closing an account also gives you a few benefits. Card companies are required by law to notify you if they choose to raise your interest rates. Even cards that claim to be “fixed” can still be raised if the card company feels like it. They usually notify you with a white slip of paper in the envelope with your monthly statement. Most people toss these slips of paper assuming they are another sales tactic to get you to buy something you don’t need, but they are extremely important. The only way to avoid this raising of your interest rate is to close your account within the next 30 days. That way, you stay with the old rates. If at any time, however, you choose to reopen that account, the new rates would then become applicable.
All credit card account closings MUST be done in writing. A simple and effective form letter for such correspondence is easy enough to find on the Internet, and again, to truly close out these accounts, you should enclose your final payment that pays off the card with your letter. The only exception to this is if your card is stolen. Your card company will then immediately close out your account over the phone, but it is still a good idea to send them a formal letter at some point, as well.
Closing a credit card account is something we’ll all do at one point or another. But to completely render yourself free of responsibility from that account, you need to pay off the full balance, too.