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How and Why to Cancel a Credit Card, Without Destroying Your Credit Score
October 4, 2021 | Posted by: Marc Crossman
While cancelling credit cards may seem to make your life easier, there are some complications to consider.
Canceling can hurt your credit score and affects your credit in two ways:
· Length of credit history
· Credit utilization ratio
When cancelling makes sense
· High APR
· High fees
· Frequent overspending
· Divorce or separation
· Outstanding debt
How to close a credit card the right way
If you do need to cancel a credit card, there's a process you should follow.
1. Pay off your balance
2. Redeem any existing rewards
3. Call the credit card company
4. For extra protection, send a letter of cancellation
5. Check your credit report
6. Safely dispose of your card
Alternatives to consider
· Negotiate for a lower rate
· Downgrade to a card with no annual fee
· Transferring to a card with a zero APR intro rate
· Keep the card open, but use it sparingly
Is canceling your credit card wise?
It could be a smart idea to cancel a credit card when it's costing you too much money or hurting your credit score in other ways. However, you can do it in a way to minimize the damage to your credit file.
Contact us today at 780 701 3888 or marc@albertamortgagepros.ca with questions or for more information!
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