Credit cards can be a lifesaver during a financial pinch, but not all plastic will meet your specific needs. If you're approved for a credit card only to discover the interest rate, credit limit or any other aspect doesn't suit you, you have the freedom to change your mind about the card.
Cancel the Card
You can ask your credit card company rescind your agreement at any time, but that doesn't guarantee you'll walk away without some penalty, such as an annual fee. Roughly 20 percent of credit cards carry those fees, and you'll have to pay up even if you don't keep the account. Some credit card companies waive the annual fee in an effort to keep your business. You can always attempt to negotiate away the annual fee and simply cancel the card once your account reflects a zero balance.
Potential Credit Damage
The Fair Isaac Corporation factors the new account's spending limit into your credit utilization or “debt-to-limit” ratio. This is the difference between the debt you carry and your credit limit. The larger the gap between the two, the more your credit score benefits. When you cancel a card, you lose that card's spending limit and that can lower your debt-to-limit ratio. All credit card companies' policies differ, but if you cancel the card before the first billing cycle closes, the credit card company may not report it to the credit bureaus.
Failure to Activate
One way you can say no to the new card is to keep its activation sticker in place. Unless you call the phone number on it, the card never goes active. All the same, you'll want to keep that account open. Keeping a card you can't use may seem pointless, but canceling lowers your credit utilization ratio. Keeping it always means you'll avoid negatives such as a high interest rate while allowing the spending limit to boost your credit rating. These benefits, however, may be temporary if your card company cans the account for inactivity.
Identity Theft Prevention
Whatever you do, don't just throw away a whole unused card. Not activating a credit card doesn't automatically terminate the account, and that may create a golden opportunity for an identity thief. One common method they use is “dumpster diving.” In other words, they'll go through garbage in search of personal information they can steal. If you decide to cancel, remove the activation sticker and then cut up the card.
Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.