So long as consumers are aware of the issues that they should consider before cancelling a credit card, and they have an alternate card they can use, they can then go about the process of actually cancelling a card. Closing a credit card account in exactly the correct way requires time and patience. Consumers should follow the six steps detailed.
Credit card customers should find and make a note of the contact details of the card issuer, writing down the customer service number and the mailing address, both of which appears on the monthly statement which the card issuer sends.
Trying to close a credit card account which still has a balance may result in the card issuer raising their interest rates on the outstanding balance. It is not inevitable but is certainly very possible. Therefore it is extremely advisable for consumers to pay of their balance in full before trying to close a credit card account. Consumers should not inform the card issuer that they intend to close the account until they are ready to do so, universal default clauses give lenders the ability to do almost anything, so it is best to keep the information secret until the consumer is ready to close the account.
The consumer should then contact the card issuers customer service representative, and should start by first confirming the card carries a zero balance, and then inform the representative that the card should be cancelled. Some card issuers can be liberal in the way they treat customers wishing to cancel cards, and allow them to do so without having spoken to a representative, others can be less obliging. Customers should be prepared to face customer service reps that will try and talk them out of the decision. The reason lenders try and talk their customers out of cancelling the card is that it costs the company more money to find new customers than to retain existing ones. They also prefer the fact that they are familiar with existing customers borrowing habits and can make more informed lending decisions with existing customers than they can new customers.
If the customer has made a decision to cancel the card account they should remain firm in the face of a customer service representative trying to convince them otherwise. The consumer should tell the representative that they want it formally noted that the account is being closed at the customer’s request and they should ask the representative for a name and address that the customer can write to which notifies the card issuer that the account holder is formally cancelling the account. The consumer should then send a letter and include date and time of the call made.
To ensure that liability now rests with the card issuer for closure of the account and in case the customer service representative makes a mistake, the consumer should send a letter cancelling the card issuer, addressed to the name given by the customer service representative, directing the card issuer to close the account. The letter should request that written confirmation of the account closure should be given. The letter should obviously include, name, account number, address and the details of the phone call. The consumer should also state in the letter that they would like their credit report to state that the card was closed at the customer’s request. Credit scores no longer penalize customers for closing accounts very much, and it is important that in future no one misinterprets why the credit card account was closed, or thinks that the card issuer made the decision to close the account, which would reflect poorly on the consumer.
Consumers should make a copy of the letter for their reference and can also send with the destroyed card along with the letter. The letter should be sent by register post so that it can be proven that the card issuer has received it.
The customer then needs to wait. Card cancellation may take as long as a month or even longer, since card issuers can be very large organisations and be extremely bureaucratic. After allowing sufficient time, the consumer should have a look at their credit report and make sure that the account has been marked closed. If the reports still says the account remains open, the whole process should be repeated. Customer service should be contacted and the company should be informed there has been a mistake, follow up with another letter and include a copy of the original one sent and again send it be registered mail. The consumer should continue checking their credit report until the report reflects the closure of the account, the credit bureau is not responsible for making sure that the credit report is accurate. Consumers should endeavor to ensure that what their creditors have told the bureau is correct.
The consumer when going through the process of cancelling their card may want to keep a record of whom they spoke to, on which date, and what was said. If anything goes wrong, when dealing with the card issuer all the facts will have been recorded, when the return receipt from registered post has been received, the consumer should file it and make a note of the date that it was received.
Although consumers should put some thought into whether it would be prudent to cancel their credit card first, actually cancelling a card should not have a major impact on their credit score, and any effect should be both minimal and temporary. If a consumer has a good credit score, the closure of an account should not affect their ability to obtain credit at fair interest rates. Once it is obvious that the consumer themselves closed the account, then the credit score should recover.
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