Before you wield a knife or scissors to destroy that credit card, you must take the proper steps to cancel and close the account. Regardless of whether you have found a card with a better interest rate and wish to transfer the balance or you simply are looking to reduce your overall debts, it is important to notify your lender of your desire to cancel. Canceling a credit card is fairly straightforward, but there is a proper procedure that must be followed, or else you could find yourself in a sticky credit situation.
It is very important to first pay the entire balance of a credit card before you begin the cancellation procedure. It is possible that fees and penalties may be assessed if you attempt to cancel the card while a balance remains attached to it. To ensure that you pay it in full, contact the card issuer and request a payoff quote with a good-through date and a per diem (a dollar amount required per day after the expiration of the good through date).
Contact the Company
When you inform the card issuer that you wish to close the account and cancel the credit line, your call will likely be transferred to a credit retention agent, who will offer you a different account or a more competitive program. Make sure that you finish with an account official who can actually close the account. Ask for written confirmation of the closure be sent to you either by email or by regular mail.
A formal business letter to the credit card company is in your best interests. This letter should clearly express you decision to cancel the account and cite the conversation you had with a credit card official and the date. Ask for further confirmation of the closing of the account. This might seem like overkill, but it is important that the account be fully canceled and that you have a full record of your communication with the company. Keep a copy of this letter.
Credit Report Follow-Up
Monitor your credit report for the following few months. Credit card companies are required to report up-to-date statuses of their accounts, but it might take a few months for the record to reflect the calculation. If this is not accurately reflected in 90 days, you may need to contact the card issuer again and send the documentation you retained proving your earlier cancellation.
Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.