I have a credit card that I don’t use very often and have been thinking about cancelling the account. Is this a good move?
If you are considering terminating a line of credit, firstly make sure that there are no outstanding debts on your card. If your balance is greater than zero, keep the account open until you pay it off in its entirety. Do not contact your cards issuer about closing the account until the balance is paid down, otherwise you run the risk of them increasing your interest rate. Some credit card companies will make a point of raising your interest rate to the maximum amount allowed as a penalty if you try to close the account with a balance still outstanding.
Keep in mind that if you intend to apply for a car loan or mortgage in the immediate future, you would be better off leaving your credit card account open to better your chances of qualifying for a prime rate. This is because credit scoring agencies examine a consumer’s debt-to-credit ratio when determining their score. The more available credit you have as compared to the amount of debt you are carrying, the higher your score will be. This is why, if you anticipate that you will be shopping around for a home or a car soon, the best move may be to not cancel any credit card accounts just yet.
Otherwise, if you feel sure about closing your account, contact your card issuer. Most credit card companies will allow you to cancel an account over the telephone. Prepare yourself for the customer service representative to attempt to talk you out of terminating the line of credit. You may be offered deals and incentives to keep the account open, such as the waiver of an annual fee or a card upgrade. If you are determined to shut down the account, politely decline their offers and ask your issuer to inform the credit bureaus that your account was “closed at customer’s request” so that your credit report will accurately reflect everything. Jot down the name of the representative you spoke to, and the date and time of day. Keep this along with the written confirmation of the account’s closure that the issuer will send to you in the mail. This way, should a problem ever arise at a later date, you have proof that the account was closed.
Latest Other Card Guides
If you need to make ends meet before your next paycheck, fast cash options like payday loans or installment loans are not your only options. Paycheck advance apps have been booming in the financial services industry in recent years, and the idea of an app that allows you to borrow money with low or no […]Continue »
The holiday season is a time when many Americans spend big on dearest friends, relatives, and themselves. During the festive fuss and buzz, it’s easy to fall into the urge to spend and buy more than you can afford. However, if you don’t want overspending to set you back financially in the new year, here’s […]Continue »
If you frequently make online payments but remain concerned about your sensitive bank account details, virtual credit card or digital wallet services can give you the added layer of protection you need. A virtual credit card (VCC) is an online only version of your debit or credit card. It’s not a physical card, but a […]Continue »
Each of us probably has a credit card in the back corner of your wallet that you haven’t used for a long time. And more than once you may have thought about whether you should cancel that card. But closing a card might not be the smartest thing to do, as this move could certainly […]Continue »
Personal data is any information that obviously relates to a particular person and can be used to identify them. It is a key aspect of online identity, but unfortunately, it can be exploited wrongly. Some individuals might steal personal data to hijack mailboxes, create fake documents, and use people’s contact information to harass them. Cybercriminals […]Continue »