3 Keys to Closing a Credit Card Account

Why Close a Credit Card Account?

Closing a credit card account is not something to be taken lightly. After all, credit cards can be valuable tools for managing finances and building credit. However, there may come a time when you need to close a credit card account for various reasons such as high fees, poor customer service, or simply not needing the card anymore. Whatever the reason may be, it is important to know the proper steps to take when closing a credit card account. Here are three key things to keep in mind when closing a credit card account.

1. Pay off Any Outstanding Balance

Before closing a credit card account, it is crucial to pay off any outstanding balance on the card. This is important because if you close the account with a balance, it could negatively impact your credit score. Not only will it increase your credit utilization ratio, but it may also lower the average age of your credit history, both of which are important factors in determining your credit score.

Tip: Set up a repayment plan

If you are unable to pay off the entire balance at once, consider setting up a repayment plan with the credit card company. This will allow you to pay off the balance over time while still keeping the account open. Once the balance is paid off, you can then proceed with closing the account.

2. Contact the Credit Card Company

The next step is to contact the credit card company and let them know of your intention to close the account. This can usually be done over the phone or through their online portal. It is important to make sure that you have all the necessary information, such as your account number and personal identification, before making the call.

Tip: Request a written confirmation

To ensure that the account has been successfully closed, it is recommended to request a written confirmation from the credit card company. This will serve as proof that the account has been closed in case of any discrepancies in the future.

3. Monitor Your Credit Report

After closing a credit card account, it is important to monitor your credit report to ensure that the account has been properly closed and is no longer showing as an active account. This is important because any discrepancies on your credit report can negatively impact your credit score. If you do notice any errors, be sure to dispute them with the credit bureau to have them corrected.

Tip: Keep track of your credit score

Closing a credit card account may also have an impact on your credit score. It is recommended to keep track of your credit score before and after closing the account to see if there are any changes. If there is a significant decrease in your credit score, it may be worth considering other options such as keeping the account open or opening a new credit card to maintain a healthy credit score.

Final Thoughts

Closing a credit card account can be a daunting task, but by following these three key steps, you can ensure a smooth and successful closure. Remember to pay off any outstanding balance, contact the credit card company, and monitor your credit report after the account has been closed. By being proactive and taking the necessary precautions, you can avoid any negative impacts on your credit score and successfully close a credit card account.