Canceling Credit Cards

You probably remember your mother telling you that there's a right way and a wrong way to do everything. That's especially true when it comes to canceling a credit card. Before you charge to the phone to put an end to that plastic, find out how to do it the right way, so you can protect your credit rating.

Cancel that Card

If you're trying to get your financial house in order, experts agree it's important to look at the credit cards you hold. Do you have too many tempting choices? Are you paying double-digit interest on your purchases?

"Most people have too many credit cards. You really don't need more than two or three, so if you have more than that you probably should get rid of a few," says Amy Fleitas of bankrate.com.

How do you get rid of a credit card without harming your credit rating?

Zero Balance
Never cancel a credit card that has a balance on it. "The moment that you cancel the credit card they're going to jack your rate up as high as they possibly can and it's going to cost you a lot more money," warns Fleitas. So the first thing you should do is call the issuer and ask if there is a balance. If there is, pay it off as quickly as possible. "Ask them to send you a letter in writing, saying you have a zero balance, " adds Fleitas. Then when you have proof that you owe nothing, call back and request that they cancel the credit card.

At My Request
When you make that call to cancel, be sure to ask the issuer to cancel the card at your request. "You want them to cancel it at your request. You want that printed in your letter and in your credit statement saying cancelled at the customer's request. As opposed to it looking like the card company canceled your card for you," says Fleitas.

You should also get the name and direct phone number of the person you are talking to from the credit card company. Mark down the date and time of the call, and keeps notes of what was said.

Paper Trail
It's important to follow up the phone call with a letter to the credit card issuer with details of your request and your call. Include your name, account number and that the card was cancelled at your request with a zero balance. "You always want to have a paper trail.
You want to have proof of what you've done. It's always a good idea just in case there's a mistake. There are always mistakes, you know, in every business, and credit cards are no different," says Fleitas. For added protection, it's best to send the letter certified mail.

Check Your Credit Report
After the call's been made and the letter's been mailed, wait 30-60 days and then call, write or e-mail the three major credit reporting agencies and request a copy of your credit report. You want to make sure that the credit card has in fact been cancelled and that the report says it was cancelled at your request. "When you apply for loans in the future…to buy a car or an apartment, or what not, you want to make sure that it shows that it was your choice to get rid of that card and not the company's choice to take it from you," says Fleitas.

Have I got a deal for you!
When you call to cancel a credit card, the issuer may try to talk you out of it. "They might say you know we won't charge you an annual fee anymore, or we'll give you a zero percent interest on your card," says Fleitas. Airline cards may even offer you a free ticket to stay on as a customer. Fleitas suggests you listen carefully to the offer, and if it's not a great deal, then go ahead with your plans to cancel.


Did You Know?
Receiving a Credit Card
Federal law prohibits issuers from sending you a card you didn't ask for. However, an issuer can send you a renewal or substitute card without your request. Issuers also may send you an application or a solicitation, or ask you by phone if you want a card - and, if you say yes, they may send you one. (Source: www.ftc.gov)

Did You Know?
Annual Fee Or Monthly Maintenance?
Rather than charge an annual fee, some lenders impose a monthly fee, often from $6 to $12 a month, whether you use the credit card that month or not. "Many people don't blink twice over $6 a month—it doesn't seem so bad," says Janet Kincaid, a credit card specialist with the FDIC. "But if they stopped to think that they're paying $72 a year just to be able to carry a card, they'd realize they could have done better by paying a lower annual fee." (Source: www.fdic.gov)

Read more smart consumer tips and strategies
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