Closing a credit card account with a balance
|  Dear
Dr. Don,
If there is a small balance left over after closing an account
with a credit card company, can the company continue to bill you for those fees,
or will it send you a final bill and from there? And if the bill is not paid,
does it then goes to collections?
-- Angela Accretion
 Dear
Angela,
You can close an account to additional purchases, but you can't
truly close a credit card account until you pay off the balance. There's
no final bill until there's no outstanding balance. Ignoring that small balance
will become a large mess as you accumulate late fees for nonpayment, and those
missed payments drag down your credit score.
Here's
how Maxine Sweet, Experian's vice president of public education, defines a closed
account in her Ask Max credit advice column: "Closed
accounts are accounts that are no longer available for further use. Closed accounts
may or may not have a zero balance. Closed accounts with delinquencies remain
seven years from the date they are reported closed, whether closed by the creditor
or by the consumer. Positive closed accounts remain 10 years." If
your account is closed to new charges, and there's a small balance, pay off the
balance to close the account. The Bankrate feature, "Closing
your account,"
provides additional information and even helps you with a form letter to send
to the credit card provider. Collections isn't some magical
place where debts go to die. When a company charges off your credit card
debt, it's just taking an accounting step to recognize that it is a nonperforming
loan. The company will decide how vigorous it will be in trying to collect
on the outstanding debt. Unless the statute of limitations is up on the contract,
you still owe the money. The Bankrate feature, "State
statutes of limitations for old debts,"
explains the statutes in greater depth but it's not a substitute for legal advice. Your
problem isn't likely to be fixed by the statute of limitations, at least not any
time soon. To ask a question of Dr. Don, go to the "Ask
the Experts" page, and select one of these topics: "Financing a
home," "Saving & investing" or "money." | 
