How to Properly Cancel a Credit Card

In today’s rough economic waters, the decision to cancel a credit card is a fairly common one. Finding a new one with a lower interest rate or a better rewards program is often enough to make someone want to transfer their balance and cut up their old card. For others, canceling cards is actually just a matter of financial discipline, especially after paying off a mountain of old debt. In any case, there’s a right and a wrong way to do it and the last thing you want is to do it the wrong way and end up actually hurting your credit, rather than saving it.

Here’s the right way to do it:

1.) Make sure the card is paid off. The first thing to do is call the customer service number and verify that your balance really is zero. Remember that you may have thought you paid it all off awhile back, but there may still have been interest accumulating.

2.) Cancel the account on the phone. While you’ve got them on the phone is the best time to break the news to them and tell them you’re canceling the card. There are some card companies that actually allow you to cancel your account without actually speaking to anyone, but these are rare and most of them want the chance to talk you out of it. Listen to their offers if you like, but in the end, you need to remind them that you’re serious and want it closed immediately. Tell them you want it specifically noted that the account was closed at your request. Write down the representative’s name, the date and time of the call, as well as a name and address where you can also send a written notice of cancellation.

3.) Send them a cancellation letter. The purpose of this short letter is to cover yourself, in the event that a mistake is made and your account is not closed at the time you requested. Remember that customer service reps make mistakes all the time and you need to make sure all your bases are covered. Include your account number and all the details of the call that you wrote down, including the representative’s name, with the date and time of the call. State again very specifically that you want your credit report to read that the account was closed at the customer’s request. Another item you should include is some type of verification that you paid the entire balance off (such as a check number). Be sure you send the letter via certified mail and/or request a return receipt!

4.) Wait patiently. It can take weeks to verify that a credit card has been canceled, so it’s best to just hang in there for at least 6 weeks, before checking your credit report. You can get one free report per year from each of the three major credit bureaus, so you’ll save yourself some money by not having to do it twice. In the event that the account is still open, you will have to repeat the above steps all over again. Start by calling the customer service number again to inform them of their mistake and follow it up with another letter, just like the first one, with all of the same details. If it doesn’t work the second time, remember that you can file a report through any one of the credit bureaus, as well as through the Consumer Finance Protection Bureau.

5.) Keep all your notes and paperwork. This goes for any return receipts, copies of letters and details of each and every phone call, until the matter is completely resolved to your satisfaction.

Although canceling a credit card should certainly not be this much of a hassle, things like this do occur and it’s far better to be prepared for a lengthy and difficult process. Although an older account with a long and positive history behind it still looks much better on your credit than a recently opened one, people open and close credit card accounts with such frequency these days that it will probably not raise very many eyebrows, provided your credit report reflects that it was indeed done at your request.

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