Can You Close A Credit You Owe Money On

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Credit cards can be a slap-up tool when spending money, especially large amounts, just can also exist a financial brunt if used incorrectly. Credit card debt is one of the most common causes of bankruptcy in the United states, and people should always be cautious when using their cards. If the time is right for you to close one of your credit cards, y'all can achieve this task past contacting the right people and following through.

1. i

   Decide which card to close. Call up about why yous are considering closing the credit carte du jour. Information technology may take higher fees than other cards, be specific to a store you don't store at any more, or may be simply get unused. Whatever the reason, make sure that you desire to close this card. Closing a credit carte business relationship can exist a somewhat trying process and can have a temporary, negative event on your credit score, so don't take these decisions lightly.

   • Too be sure not to close all of your credit cards. In theory, this would limit your ability to go into debt, but certain situations call for immediately available credit. Yous will want to have a sound fiscal program, and a large emergency fund in place to avert debt and high-interest loans. You don't want to have to accept out a loftier-involvement loan when you lot could have used your carte.^[ane]

2. 2

   Make sure to close the cards with higher interest rates. If you are looking to narrow downward your credit carte du jour collection, close those cards with higher interest rates first. It makes sense to keep those cards with proficient benefits, merely paying exorbitant interest rates when yous accept the choice not to is a bad idea. The same is truthful of credit cards with high fees. Identify these cards and cut them out get-go.^[two]

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3. 3

   Find out how long the account data from this menu will be on your credit report. Even when a credit card has been closed, the business relationship information will remain on your credit report for quite some fourth dimension afterward. Due to specific credit reporting laws, a credit bill of fare account in good continuing (paid at least minimum amount, no missed payments, etc.) volition stay on your report for ten years, while a negative study will stay for vii years.^[3]

4. four

   Figure out what endmost this card will practise to your credit score. Endmost a credit card account tin can affect your credit score in a number of ways. The effects of doing so are generally not seriously harmful to a person's credit; however, they can crusade a cursory subtract in your credit score in some cases. Go along in mind that closing a card will never amend your score. Closing a menu tin can impact your score in the post-obit ways:^[four]

   • Reducing your account variation. Credit agencies apply a metric that measures how many credit sources you lot have and their variety (mortgage, automobile loan, credit card, etc.). Closing a credit card has the potential to decrease this measurement.
   • Reducing the boilerplate account age. Another measurement used by credit agencies measures how long y'all have held certain accounts. If yous choose to close an older credit bill of fare, the boilerplate age of your accounts may decrease, causing a dip in your credit score.
   • Reducing your credit utilization rate. Finally, reporting agencies employ a metric chosen "credit utilization rate" that measures how much credit you have vs. how much you use. A lower rate is favorable, but closing a menu may significantly increment it. This is a very important factor in determining your credit score, so recollect about the outcome this might have.^[5]

5. five

   Think about your timing. As previously mentioned, closing a credit card can lead to temporary dip in your credit score. If you lot planning to make a large purchase, similar a car or house, in the near term, think about waiting to close your credit card after you brand that buy. Your temporarily-lower credit score could make your big purchase fifty-fifty more than expensive by securing you a college interest rate on the loan.^[half-dozen]

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1. 1

   Brand sure yous've paid off any remaining balance. Never try to close a credit card if you still owe money on information technology. If you want to get rid of a card, stop using it and pay it off before y'all close the account. You can do this the aforementioned way you lot ordinarily pay your credit card beak. This tin can exist online or by writing a bank check for the amount owed and mailing information technology with a copy of your bill to your credit card visitor.^[vii]

2. 2

   Redeem rewards earlier closing your card. Before endmost your card, cheque online or call in to your lender to bank check if you have any outstanding rewards balances on your bill of fare. You don't want to forgo any potential cash or travel rewards. In some cases, however, this may be unavoidable as rewards may be limited to a certain time of year or value threshold that you oasis't still reached. Accept advantage of these rewards if possible, and so motion on to the next step.^[8]

3. 3

   Phone call the 1-800 number on the back of your carte du jour to contact the customer service department. Y'all may have to wait on hold for a bit, but this is past far the best style to confirm with a person that your credit card is indeed closed. Tell the company client service representative that you demand to shut your card, and exist prepared for his endeavor to stall yous and try to convince you to continue your card. Hold fast, though, and stick to your original intention.^[9]

   • The customer service number for your lender is also bachelor on your bill and online.^[10]

4. four

   Write down whatsoever information given to you lot when you lot speak with the customer service representative. Tape your contact with the credit card company. Most companies will give you a service or phone call number. Write this in addition to the time and date that you spoke to the client service representative. For actress insurance, record the representative'due south name and employee number (this is likewise fairly standard).^[11]

5. 5

   Hold your footing. Your credit card company may try to provide you lot with an offer to get you to stay. Remember, if an offer sounds too skillful to exist true, it probably is. Stick to your guns about endmost your account, if that'south what you want to practice.

   • Alternately, you can attempt bargaining with your provider for lower interest rates and fees. In some cases they may agree to these terms to keep you lot every bit a customer.^[12]

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1. 1

   Write a letter to the credit card company reiterating your intention to shut the business relationship. This is equally much for your own records as information technology is for making sure the account is closed. Sending a letter will finalize the closure of your account and give you a legal written and dated record of your action should anything get wrong with the closure of your account. If you really want to guarantee total legality, ship the letter by certified mail service and hold on to the receipt y'all will receive upon paying the certified postage.

   • In your letter, request written confirmation that the account is closed. Make sure to also include your data, similar your name, telephone number, and address.
   • You may likewise want to include proof of payment from when you paid off your remaining account balance. Do and then by including a cancelled re-create of the check.^[thirteen]
   • You lot tin can also request that your credit study say that your menu was closed "at the consumer's asking." This will make the situation clear to future lenders.^[xiv]

2. 2

   File the letter in your records. Make a re-create of the letter and keep it in a safe identify. By doing so you will take consummate and reasonable proof that you closed your credit card account. As well exist sure to agree onto the certified post receipt. This will help evidence that the credit card visitor received your letter.

3. 3

   Wait a few weeks and then contact your lender to confirm. Follow upwards a few weeks later to make sure that your account is indeed airtight. Companies may occasionally make mistakes and neglect to close your account. The endmost procedure can take up to a calendar month, so don't worry if it isn't closed after a few weeks. If your account has not been closed afterward a calendar month, though, information technology'south fourth dimension to have activity.^[15]

   • One time closure is confirmed, cutting upwardly your credit card to finalize the closure.^[xvi]
   • Yous tin can check whether or non an account has been airtight by obtaining a copy of your credit report.^[17]

4. 4

   File a complaint, if necessary. Check your credit report a month afterwards yous starting time chosen to have your card airtight. If the card is still active, it is is time to accept farther activity. First, endeavor calling your credit card company again and writing another letter. Look for a response. If this fails, you can file a dispute through a credit reporting agency (either Experian, TransUnion, or Equifax). Each agency'south website has clear instructions on how to do and so. If your account is all the same open up later this, y'all tin can file a complaint with the Consumer Fiscal Protection Bureau at http://www.consumerfinance.gov/Complaint/.^[xviii]

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Commodity Summary Ten

Before yous close your credit menu, make sure you've paid it off completely, equally closing a credit bill of fare with a balance can lower your credit score. In one case the card is paid off, call the 1-800 number of the back of the card to speak with customer service. Be prepared for them to make offers and then yous'll go on the card open up, and stand your footing on your decision to shut the menu! Once you lot've canceled the card, make sure to call your lender after a few weeks to ostend the account is closed. To learn how to choose the best fourth dimension to shut your card, read more than from our Financial Coach co-author.

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