You should review your credit history before you close a credit line. Also, consider how the closure will affect it. Requesting your credit score can be done free by many issuers. Many websites also offer free credit scores. Although the scores are not as accurate as FICO scores they can give you a good idea about your credit standing.
Close inactive credit cards or those that are not frequently used
Credit cards are a valuable financial tool. However, they may be no longer needed. They may have high annual fees or high interest rates. Or they might offer rewards that aren't sufficient. Whatever the reason, it's important to understand how closing them will affect your credit score, and how to handle the change.
The FICO Score may be lower if you close a credit account. It's a wise decision to carefully consider whether closing an inactive or infrequently used credit card is in your best interest. Although it won't increase your credit score or reduce the temptation to make excessive charges, closing an inactive account can help you lessen that temptation.
Inactive or rarely used credit cards should be closed. You need to find a more efficient method of using the account. It might be worth opening an account online for the infrequently-used card. You can make small purchases over the course of a few months, and then pay them off in your next billing cycle. This strategy will help keep your credit limit at a high level while demonstrating responsible credit usage.
Cancel cards with outstanding balance
Contact the credit card issuer to cancel credit cards that have an outstanding balance. Your account should be cancelled by customer service. Before closing your account however, ensure that the balance in your account is not more than zero. You may also find residual interest on your account. A closing of an account could take significant time and effort.
Your credit report may take up to several months before it reflects the cancellation. Regardless of how you cancel a card, make sure you get a written confirmation from the issuer. This way, you can keep track of when your account was closed. You could be charged additional fees if you don't.
Consult a financial advisor to determine if you should cancel a credit line with an outstanding balance. If a creditor is unable to pay the monthly payments, sometimes canceling a card with an outstanding balance may be the best option.
Cancel cards with a low amount before closing
Be sure to contact your credit provider before you close your credit-card account. It is necessary to notify your credit card provider of your intention to cancel the account. Otherwise, residual interest will start accruing after the final bill. You might also be required to contact them in order to inquire about a lower rate or reward scheme.
For credit card accounts to be closed, contact the issuer of your credit cards and request written confirmation that there is no balance. After you close the account, check your credit score between 30-60 days. It should say that you have closed the account, and that there is no balance. If it still shows $0, you need to file a dispute to remove it from your credit reports.
A joint credit card may be required if you go through a divorce, separation or other significant life change. This will keep you from regretting costly purchases later. A joint credit card can be used to help you pay off other debts if you are trying to manage debt.