Cancelling your credit card? Here is what you need to know

Posted on Wednesday, December 5, 2018 - 10:28

You may think that cutting up your plastic and throwing it away is the way to go when cancelling your credit card, but there is more to it than that. Although cancelling your credit card is not a complex process, these tips can help you cancel your card without hurting your credit score.

Is there any outstanding balance?

Before you say goodbye to your credit card, check to see if there is any outstanding balance on the card. Cutting your card before you pay off your balance in full can affect your credit score. The more you put it off, the more damage your credit score. This also means paying off any debt that is on the card to improve your chances of a better interest rate on your card.

Transfer your reward points

Rushing to close your credit card without checking if you have reward points can be a bummer, especially if you were saving points for a big-ticket item. You can opt to transfer your points to a partner program or use them to redeem them. If you are planning on redeeming your points, carefully consider which option will give you the best value for your money.

Joint accounts considerations

If your credit card was opened using a joint account, both cardholders need to agree on closing the account. It will also be helpful to discuss with the other cardholder in terms of how you are planning on paying off the debt on the card. If both holders refuse to pay the remaining debt, it can affect both of your credit scores. Remember to cancel any debits that may be on the card to avoid being slapped with a penalty fee.

Check in with your lender

Depending on your card lender you may be required to either call or tell them in writing that you will be cancelling the card. However, they may refuse to cancel the card if you still have outstanding balances. To protect yourself from any issues later on down the road it is important to keep records of who you spoke to and when you cancelled the card.

Confirm that your card has been cancelled

Before you go on a card snipping spree, it is important to check that the card has been cancelled. You can do this by Logging into your account. Your credit card provider will also send confirmation that your account has been closed. If you have are still receiving statements for the card make sure to contact your lender immediately.

 

Once you have officially cancelled your credit card it can open up a door to finding a card that comes with an interest rate and fees that are suitable for your finances. Keep in mind to compare the cards features and whether they will be suitable for your needs. Always remember to read the fine print to avoid taking something that can cause you to fall into a debt spiral.

Rate this Blog: 
Average: 5 (1 vote)