People’s spending patterns can change over time. As a result, it is not uncommon for people to stop needing credit cards that they once found to be useful. In such cases, one option is to hold on to their credit cards for the purpose of holding on to the credit histories that have been built up through the use of those credit cards, which can have an enormous impact on their credit scores. However, there are plenty of cases when that might not be practical, with an excellent example being a credit card with a higher than normal annual fee. As a result, there are plenty of cases when closing a credit card is the best solution, which in turn, means that interested individuals need to learn the right way to close a credit card.
How Can You Cancel a Credit Card in the Right Way?
As stated earlier, closing a credit card is problematic because it can have a negative impact on a person’s credit score, which is the single most popular method of measuring their creditworthiness. Something that determines their access to financial products and services from a wide range of financial institutions. In part, this is because when a credit card is closed, its credit history is lost, which can become particularly problematic because the bad marks collected through the use of that credit card won’t be. However, it should also be noted that financial institutions care a great deal about the percentage of a person’s available credit that is being used, which says much about the riskiness of taking them on as a customer. As a result, it is not impossible for someone to take a further hit to their credit score when they close their credit card because their credit utilization ratio has worsened.
Understanding the exact way that closing a credit card will impact a person’s credit score is important because it can provide them with some ways to mitigate those consequences. For example, if they believe that their credit utilization ratio will worsen, they might be able to make up for that particular problem by asking for a credit limit increase on one of their other credit cards. There is no guarantee that interested individuals will be able to compensate for all of the consequences of closing a credit card, but being prepared should nonetheless serve to cushion the impact to some extent, which is still better than nothing at all.
Moving on, the other steps for closing a credit card should be rather simple and straightforward for the most part. The first step is figuring out how to contact the relevant person who can close the credit card. Generally speaking, this should be as simple as calling the customer service phone number that should be listed on the credit card, the credit card statements, and the credit card website. However, there might be times when knowing the physical address can prove useful as well, which should be listed somewhere in the same sources.
Afterwards, closing the credit card should be a simple matter of making use of the collected rewards points, paying off the outstanding balance if there is one, and then asking for it to be cancelled by calling in. With that said, it can be helpful to be extra-cautious when carrying out this process because it is not unknown for people to make mistakes. For example, considering double-checking that the balance has been paid off before actually going to cancel the credit card. Likewise, considering sending in a letter to request for the credit card to be cancelled, which should be in addition to the spoken request. On top of this, it can be useful for interested individuals to request a written statement that their credit card has been closed as insurance in case something goes wrong. Finally, interested individuals will want to make sure that their credit card has actually been closed by checking their credit score report, which should list it as being so. Please note that the whole process can take some time, particularly when people are being extra-cautious. However, that extra caution can pay off handsomely because a problem occurring in the process of closing a credit card can be very frustrating unless interested individuals are prepared ahead of time to deal with it.