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How To Cancel Credit Card Accounts

How To Cancel Credit Card Accounts

The average consumer has between 10 and 12 credit cards and roughly $8,000 worth of debt on those cards. For a number of individuals, paying down credit card debt and whittling down their credit cards to two or three is a difficult process. Greater access to available credit increases the likelihood of running up debt again once it is paid down. Most financial advisors and credit counselors recommend paying off and canceling the majority of your credit cards as part of being financially responsible. Here's a quick rundown of how to cancel credit card accounts and what to look out for.

The first step is either to pay off all outstanding balances, which may or may not be realistic, or consolidate all credit balances to one or two credit cards at a low interest rate. If a balance still exist however, you can cancel a credit card without closing it completely. By canceling the card first, it prevents you from making any additional charges or using the credit card for any purpose. If you have the ability to make a payment in full and zero out the balance then you need to call the credit card company and speak with customer service first. Customer service will be able to provide what is called a "payoff amount" which takes into account interest accrued up to that moment in time. By writing a check for the payoff amount and mailing it in immediately you should avoid situations such as double billing or additional interest.

Once you've mailed the check it will take anywhere from 3 to 5 days on average for it to reach its destination and be applied to the balance. Once the check has both cleared your bank and been applied to your credit card, you can call customer service a second time to close the account. Some financial institutions provide an automated means to close a credit card account by navigating a menu. This doesn't apply to all institutions and it only works when the system recognizes a zero balance on the credit card. In most circumstances though you will want to speak with a person to document the call.

When speaking with a customer service representative, verify that the credit card in question has a zero balance and request that your credit card be canceled effective immediately. Be sure to note everything during the call such as the name of the representative and the date and time in case you need to reference this information in the future. You can also request at this time that your credit report at the three major credit bureaus reflects the statement "account closed at owners request" however, normally this is not necessary.

Follow the same procedure for every credit card account you wish to cancel. In no time you will narrow down your active credit cards to two or three which, is in reality, the most any consumer should have. The rule of thumb is one or two credit cards for daily activity and then another credit card for emergency purposes only. After a few months, request one of your free annual credit reports from the major reporting agencies to verify that the credit card account was canceled or closed and that the statement of it being at the owner's request is on file.

Image by: Edd Dumbill