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There's always a right way and a wrong way to do
things, and that goes for canceling a credit card.
Whatever your reason for getting rid of a credit
card you'll want to make sure you do it thoroughly and that no harm
is done to your credit report.
Pay off the balance
First, don't try to cancel a card while you're paying the balance.
Cancel the card only after you have paid off the balance in full.
"There isn't a need to cancel that account until you're
through with it," says Jean Brannan, community outreach coordinator
for Consumer Credit Counseling Service in West Palm Beach, Fla.
She adds that you have to employ self-discipline and stop using
a card while you're paying off the balance.
Follow these steps
OK, let's say you have paid off a card's balance and you want to
cancel the account. Brannan suggests that you do the following,
in order:
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Notify the card issuer by phone. |
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Follow up by notifying the card
issuer in writing. |
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Get a copy of your credit report
and make sure it's accurate. |
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Repeat, if necessary.
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Notify the issuer by phone
Your issuer's customer-service number will be printed on the back
of the card, on the monthly statement, or both. Call that number,
confirm that your balance is zero, and notify the customer-service
representative that you're canceling the card.
Do not call to cancel a card if you still have a balance.
If the card issuer knows you are thinking about leaving, it could
raise your interest rates to the maximum allowable by law as a penalty
for closing the account, if you do so with an outstanding balance.
Some companies will allow you to cancel without even
talking to a customer service representative. Others will transfer
you to a special department for the sole purpose of trying to convince
you to not cancel your card.
Listen to a counteroffer
Steve Rhodes, past president of Myvesta.org, a financial crisis
treatment center, suggests you spend a little time listening to
the representative. They might be willing to lower your interest
rate, offer a two-for-one airline ticket, or upgrade your standard
card to platinum. Carefully consider the ramifications of keeping
the card open. If you are in the process of reducing the number
of credit cards you carry, then cancel a different card.
If no such offers are made, or appeal to you, then
go ahead with the cancellation and do not allow the representative
to convince you otherwise.
Follow up with a letter
Write a short letter to the card issuer. "If you can get a name
so you can send it directly to someone, that is better," Brannan
says.
The letter should say that you're closing your account
and that you want your credit record to reflect the fact that you
requested that the account be closed. Provide your name, address
and account number.
Send the letter by certified mail or return receipt
requested. That way you can prove that the card issuer received
your letter, Brannan says.
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