Credit cards provide people with a quick and adaptable way to make purchases and obtain credit, and have become an essential component of today's financial operations. The idea of virtual credit cards has surfaced recently, offering an extra degree of protection and adaptability for online transactions.
However, at times people might just not feel comfortable with a credit card anymore even after they already have paid all debts, or have not cash in it, or anything. And because of his, some people will just think, why not just cancel or delete or close the account?
Closing a credit card account can be a decision driven by various factors, such as simplifying your finances, reducing credit card debt, or obtaining better terms with a different credit card provider.
However, it's crucial to approach the process of closing a credit card account with caution and follow the appropriate steps to ensure a smooth and successful closure.
Well, in this article, we will guide you through the necessary steps to close a credit card account permanently, whether permanently closing your credit card account is a good idea, and a good advice for you to know if you should close it or not.
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How to Close a Credit Card Account Permanently
Well, to close your credit card permanently, follow these steps below and you'll be able to quickly close your credit card account. They are:
Step 1. Assess your situation
Before deciding to close a credit card account, evaluate your current financial needs and the potential impact on your credit score.
Closing a credit card account may affect your credit utilization ratio and the average age of your credit accounts, which can impact your credit score. Make sure you have considered the consequences and benefits of closing the account.
Step 2. Pay off your balance
It is essential to pay off any outstanding balance on the credit card before requesting the closure. Ensure that your account has a zero balance to avoid any surprise fees or interest charges before closing.
Step 3. Communicate with the credit card issuer
Reach out to the credit card issuer's customer service through their designated phone line or check their website for instructions on closing an account. Be prepared to provide your account details and answer security questions to verify your identity.
Step 4. Submit a written request
In addition to contacting customer service, it's a good idea to submit a written request to close the credit card account. This can be a formal letter or an email. Include your account number, full name, contact information, and a clear statement expressing your intent to permanently close the account.
Step 5. Follow up in writing
After making the phone call and submitting a written request, send a follow-up letter via certified mail requesting confirmation that the credit card account has been closed. Retain a copy of this correspondence for your records.
Step 6. Monitor your credit report
Regularly monitor your credit report in the months following the closure of the credit card account. Ensure that it accurately reflects the account closure and that no further charges or fees are associated with it. This step helps you identify any potential issues that may arise after closing the account.
Step 7. Destroy the card
Once you have confirmed the account closure, safely dispose of the physical credit card by cutting it into multiple pieces or using a shredder. This prevents unauthorized use of the card and protects your identity.
Is Closing your Credit Card a Good Idea?
Well, we will not say it is a good idea, or a bad one. Simply because not everyone have the same stand before considering closing their Credit Card account. According to research, many people have complained of a bad score after closing their credit card account. Could Closing a Credit Card account hurt your credit score?
Well, it could actually, but it will depend on some factors before your credit card account closure will hurt your credit score. They are:
- Credit Utilization Ratio: One factor that contributes to your credit score is your credit utilization ratio, which is the percentage of your available credit that you are currently using. Canceling a credit card reduces the total credit available to you, potentially increasing your credit utilization ratio. If you have balances on other credit cards, your ratio could increase, which may negatively affect your credit score. It is generally recommended to keep your utilization ratio below 30%.
- Length of Credit History: The length of your credit history is another factor that impacts your credit score. If you cancel a credit card that you have held for a long time, it could shorten the average age of your credit accounts. A longer credit history generally contributes positively to your credit score, so canceling an older credit card might have a slight negative impact.
- Payment History: Your payment history is significant in determining your credit score. If you have a good payment history with a particular credit card, canceling it means that future positive payment activity on that card will not contribute to your credit score. Conversely, if you have missed payments or negative marks associated with a card you plan to cancel, eliminating that card could remove those negative factors.
- Credit Mix: Lenders like to see a mix of different credit types (e.g., credit cards, loans, mortgages) on your credit report. Canceling a credit card could reduce the variety of credit types in your credit history, potentially impacting your credit mix. However, this is usually a minor factor, and other credit types can fulfill this requirement.
- Impact Over Time: It is worth noting that the impact of canceling a credit card is not permanent. As your credit history evolves and you continue to make responsible credit decisions, the impact may diminish over time.
Should I Cancel my Credit Card Account or Just Keep it?
Now that you've read these above, now you should know your stand better to know if you should cancel it now, or just keep it. It mainly depends on what you used your credit card to do, but you could still get to choose a better option.
Perhaps you've come to the conclusion that you simply hate using credit cards. If so, you might want to keep the card in your box or counter and save it rather than closing it. It may seem clear to follow this path, but there may be a simple solution to maintain the card without damaging your credit: keeping the account open and resisting the need to use it.
Keeping it and resisting to use it may be the best option since you will not have to cry for a bad credit score later on.
Final Thoughts on How to Permanently Close Credit Card Account
At this time you should be at a stable level now as to whether to close your credit card account or not. Closing a credit card account permanently requires careful attention to detail to ensure a smooth process.
By following these steps and effectively communicating your intent to the credit card issuer, you can successfully close the account and manage your credit effectively. Remember to consider the impact on your credit score and financial situation before making the final decision to close a credit card account.
Or you can still use the best option, by just clearing all debts in your credit card, and keeping it away and resisting the temptation to use it again.
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