People write credit card cancellation letters when they want to close their credit card account for good. This can occur for numerous reasons, but since your credit can be adversely affected by closing a credit card account, you probably want to make this option a last resort rather than a first resort.
You can stay in the know about terms and fees using such online tools as the credit card chaser.
You have the right to cancel your credit card at any time. However, you do need to be aware of all of the terms and conditions for your credit card before you take this step. Some credit card companies increase your interest rates if you close your account; others charge fees, so being aware of the terms of your credit card is important!
What is a good reason to cancel a credit card?
According to the Federal Reserve, a credit card company must provide you with the option to cancel your credit card before they make any changes to the terms of your credit card. This is one of the few times that you should consider canceling your credit card.
You see, when you cancel your credit card, your credit score is impacted negatively. While the overall impact may be small in terms of numbers, for many people a downward trend of three or four points can make the difference between bad and fair credit.
You may think that paying off and then canceling a high interest credit card is the way to go, but the truth is that you are better off keeping the card open, using it once every couple of months and paying it off before the interest kicks in, in terms of your credit score. After all, if you have paid off the card, then it is reporting as a positive on your credit report, even if it has a high interest rate.
If you go to a consumer credit counseling service to help get a handle on your debt, then it is possible that they will require you to write a cancellation letter for a credit card or two, but this is more the exception than the rule.
If you have a lot of credit accounts open, even if they are in good standing, they could actually be hurting your credit, especially if you are carrying a high balance on each one. In this case, you may want to consider closing the accounts with the highest interest rates and focus on paying them off.
While the impact on your credit will initially be negative, in a few months the impact will turn into a positive because you will have less debt and fewer ways of getting into debt as well.
How do I go about canceling a credit card?
Canceling a credit card is easy. All you have to do is write a letter to your creditor expression your intention to close your account. You do need to provide your account number and your name. You do not have to tell them why you are closing your account, although you are free to do so if you wish.
You should also request a confirmation of your request in writing from the credit card company. This is your proof that they received your request and that they are going to comply. If they don’t reply to your first letter, send another one via certified mail!
According to attorney Mitchell Paul Goldstein via a question on Avvo.com, a legal website your credit card company is not legally required to respond to your request by mail. However, if you send a certified letter, this is all the proof that you need that you filed the request because a certified letter has to be signed for.
If the credit card company does not respond to your request and, in addition, does not close your account, you can call them and make the request. If they continue to stall, then you should contact a lawyer to help handle this issue. In the meantime, keep track of each call you make and make a copy of every letter you send, just in case.
For the record, most credit card companies will cancel your card on your first request with no trouble. You want to keep track just in case something is missed or they get stubborn of some detail.
If I am filing for bankruptcy, should I cancel my credit cards?
No, you don’t need to cancel your credit cards in order to file for bankruptcy. What you will have to do, according to the new laws in place for bankruptcy as listed by the Federal Trade Commission, is go to consumer credit counseling first.
Your credit counselor will help you to decide if you need to file for bankruptcy. In addition, he or she will review your accounts and determine whether canceling a credit card is in your best interest.
Use the credit card chaser tool to compare credit cards online!
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