There could be many reasons why a credit cardholder decides to close his or her account. Most likely the terms and conditions do not seem to be favorable anymore and there are many better credit card deals you can apply for. Or there are simply to many credit cards to keep track of.
Of course, you can always try to contact your bank and request a lower interest rate or lower fees. But there is no guarantee that you will get the deal you want. That means the time has come to close the existing credit card account.
The most important thing to consider in this situation is your credit score. Closing an account might damage your credit history because that will lessen your available credit and the average age of your credit history.
Weigh the pros and cons. If you have a credit card you have been using for a long time closing it will shorten the average age of your credit history for sure but if you are planning to get a better credit card deal, who cares? If you are worried that the amount of available credit will seriously influence your credit history you can ask for a credit limit increase on your other cards.
Remember that you credit report is based on many aspects of your financial life and just closing one card won’t make your score plummet from excellent to fair.
One of the best strategies when closing an account is to apply for one of the new credit card deals and close the old one only after you have been approved.
When closing a credit card account you should also make sure that it does not have any balances on it. Basically, you can not really close one without having paid off all the balances. If you forget about even a small balance you will get into trouble with late fees. If you decide to ignore them your debt will finally go to a collection agency. The only option in this situation is to close the account for additional purchases but you will still have to make your payments to the bank.
By the way, closing an account won’t help to remove any negative information from your credit report. It will still be there for the next seven years.
If you are absolutely sure that you would like to close the account submit a request to your credit card company. All you need to do is to send a general account closing letter. In the letter you should state that you have fulfilled all your financial obligations and wish to close your account.
After your account has been closed get your credit reports from all the three major credit bureaus to make sure that all the information in correct. The report should reflect that the account was closed by request of cardholder.
Closing a credit card account is a very serious move so you need to think about the consequences. Just do not get misguided my credit card myths. Do what is right for you!