Closing Credit Card Accounts

There is no denying the fact that consumers are quite adept at opening credit card accounts. In fact, of the American households that have credit card debt, the average balance carried on these cards is over $15,000. Therefore it is safe to say there is no difficulty in opening and using credit cards, however not all people have the same success when the time comes to close an account.

While it is true that closing credit card accounts may have a negative impact on your credit score, there are other reasons why closing an account is the best choice.

• Idle and unused cards are often involved in credit card fraud or identity theft.
• Other accounts are simply no longer the best choice for your credit needs.

Regardless of your reason for closing your credit card account, the following steps will help you avoid problems that may arise as a result of this action.

• Pay off the balance- As long as there is a balance on the account you must continue to deal with the credit card company. Closing the account will not make the balance disappear and as long as you are still responsible for paying off the balance there is no point in closing the account. Closing an account with a balance with hurt your credit score more than keeping it open with a balance.

• Confirm zero balance- Once you have sent your final payment on the account, wait a few days to ensure the credit has been applied. Before closing the account you will want confirmation that there is no balance remaining on the account.

• Make the request- Credit card companies do not automatically close accounts that have a zero balance. Contact the credit card issuer by phone and ask to speak to a representative who can help you close your account. Be prepared for a sales pitch which may include offers and incentives to retain your business. You may want to listen to these offers, especially if you have other credit card accounts that lack the same perks. If you are not interested in keeping the account open, politely tell the customer service representative as much and move on. You may want to take this opportunity to confirm no further action is required on your end toclose the account.

• Document your request- It’s always best to cover all your bases; in this situation it is recommended you follow up your phone call with a written notification. A short letter to notify the issuer of the card that you have requested your account be closed should suffice. Include your name, account number and telephone number. Invest a few dollars to send this letter via certified mail with confirmation of receipt.

• Check credit report- To ensure your account has been closed per your request, order a copy of your credit report after one month. This should be ample time for the information to be updated and recorded. There should be a note that states the account has been closed at customer’s request. If this information does not appear or is inaccurate, follow up with the credit card company to correct the information.

Consumers are becoming more educated in the proper handling of their personal finances. When you increase your knowledge, you increase the likelihood of making sound financial decisions which will in turn improve your overall financial health.