There are numerous compelling reasons to cancel a credit card. Perhaps the balance has been paid off, the interest rate is too high, or you have decided to streamline your finances and the number of cards you carry in order to tighten your financial belt and pay down some debt. With so many credit card options available today, it makes sense to cancel a credit card that charges an annual fee or has a high interest rate. Even if you speak with a customer service representative, write a credit card cancellation letter. This way, you’ll have a written record of the cancellation.
Part 1 Verifying that you May Cancel your Card
1. For at least a month, do not use the card. You must ensure that you do not owe anything before cancelling a credit card account for any reason. If you try to cancel an account with an outstanding balance, you may harm your credit rating or trigger a collection effort on the company’s behalf. The most effective way to reach a $0 balance is to stop using your card.
If you can’t afford to pay off the balance in the first month, you might have to spread it out over two months. While you’re paying off the balance, don’t use the card at all.
2. Check your most recent statement for a nil balance. Check your next monthly credit card statement after you have made what you believe to be your final payment. If the balance is not zero, you must continue to pay down the balance.
Even after the balance reaches zero, you should carefully review the monthly statement. You must review the recorded purchases to ensure that everything for which you have used the card has been reported.
3. To confirm a $0 balance, contact customer service. When you believe your account is completely resolved, contact the credit card company’s customer service department. Inquire about the amount owed on your credit card. If the representative confirms that there is no balance, you can cancel the account.
The customer service number for your account should be on the back of your credit card or on your monthly statement.
4. Notify customer service that you are cancelling your account. When you’ve confirmed that you owe nothing on the account, inform the customer service representative that you’d like to cancel it.
Credit cards are a sales business, so expect the representative to try to persuade you otherwise. You might be offered a lower interest rate or even a free gift if you keep the account open. If you accept one of these offers, make sure you understand the terms of your new account. Otherwise, cancel the cancellation.
For example, if the salesperson offers you a lower interest rate or a trip to Las Vegas, you could respond, “Thank you very much for your generous offer. However, I’ve decided that I don’t need this card and would like to cancel it.” You must appear determined, or the sales representative will likely continue to press you. You may eventually have to say, “I’m not trying to be impolite, but I really don’t want to keep this account. Please cancel it on my behalf.”
Part 2 Sending a Cancellation Letter
1. Determine who should receive your letter. You can probably cancel your account over the phone, according to the customer service representative. Nonetheless, you should request the name and address of someone to whom you can send a letter in order to confirm the cancellation in writing.
Even after the customer service representative has confirmed that the account will be cancelled, you should send your own letter to confirm the conversation. Inquire with the representative, “What is the name and address I should use to send a cancellation confirmation letter? Is there any specific format or information you’d like me to include?”
2. Include your complete contact and account information. Your name, home phone number, cell phone number, mailing address, email address, and account number should all be included in the letter. All of this information should be referenced at the top of the letter, before the body of the letter.
3. Consider your phone conversation. Mention the most recent phone conversation you had about your account in your letter. This will help to contextualise your letter and explain why you are writing.
For instance, your letter could begin, “Dear Sir or Madam, I’m writing to confirm a phone call I had with Agent #34567 on July 15, 2016.”
4. Declare unequivocally that you are cancelling your card. You are not required to apologise or provide an explanation for your decision to cancel your credit card account. You have every right to do so, as long as you no longer owe any money.
“I understand that my account has been closed as of our phone conversation on July 15, 2016.”
5. Request that the cancellation be properly reflected on your credit report. You should confirm in your letter that your credit report shows that you voluntarily cancelled your credit card account. This is critical for your credit score. If you voluntarily close an account, your rating will be affected very differently than if the company closes it without your involvement.
“Please ensure that my credit report correctly reflects that this account has been ‘closed at the consumer’s request,'” you might ask. Please send me written confirmation that the account is closed.”
6. Please sign the letter. Sign the letter at the bottom. As if you were signing a legal document or contract, use your formal, full name signature.
7. Certified mail is the best way to send your letter. When your letter is complete, take it to the post office and send it certified mail with a return receipt requested. Someone at the company will have to sign for the letter, and you will receive a card with the signature. This may be useful in the future to demonstrate that the letter was received.
8. Keep your letter and signature card in a safe place. You should keep a file that includes your final credit card statement, any notes from phone conversations, a copy of the letter you sent, and the post office signature card. In the event that a problem arises with this account after you believe it has been closed, you should refer to these documents.
9. Confirm that you want to cancel. The company may need up to 30 days to finalise the cancellation and notify the credit reporting agencies. After about a month, check to see if the cancellation is still on the report, with the note that the account was closed at your request.
Part 3 Deciding to Cancel a Credit Account
1. Make a plan to reduce your overall spending. Credit cards are useful. However, having too many cards available may provide too much convenience, leading to overspending. If you find it difficult to control your spending habits because credit is so easy to obtain, cancelling one or more cards may help.
2. Get rid of any extra cards that you don’t use. When you have a few open credit cards and manage them well, your credit score improves. If you have too many credit cards and don’t use them, your credit score may suffer as a result. You may discover that cancelling some of your excess credit cards has a positive effect on your credit score.
A review of your credit report will reveal the “risk factors” that contribute to a low score. “Too many credit cards” could be one of these risk factors.
3. Avoid paying fees. Some credit cards require an annual fee to be paid in order to use – or even have – the card. If you have cards with annual fees, you may be better off cancelling those accounts and focusing on the cards that are less expensive to use.
Some fee-based cards, on the other hand, may offer you incentives to use the card. These incentives could include cash back, free airline miles, gas discounts, or other valuable awards. If the benefits outweigh the fee, you may be better off keeping the card and paying the fee.
4. Reduce your chances of being a victim of identity theft. Identity theft is a growing concern in today’s world, and credit cards are a major target. The more cards you have open and use, the more likely it is that one of them will be “hacked” and expose you to identity theft. Limiting the number of credit card accounts you have should help keep this under control.
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