Getting rid of a credit card... Will it help you to save on fees and interest? The most important thing when cancelling a card is to make sure that this does not harm your credit history. Be prepared to cope with certain obstacles! Credit card companies won't be much happy. It's a fact.
First, make sure that your card balance is - zero. It is also possible to close the account while it still has got a balance. You will still have to pay off the balance, though. While you are paying off the balance, make sure not to use your card. Most likely, you will need as much self-control as possible.
Next step is - calling your credit card issuer. Inform that your balance is 0 and that you intend to cancel the card. And now! Good advice: Be Persistent! The customer service person will try by all means change your mind. He/she will promise lower rates - all to talk you out of your decision.
Your next step - write a letter to your card company. You need to clearly state in your letter that your credit report should show that it was your decision to cancel the card. One does not have to provide any (any!) reason for doing that. Hand in the letter personally so as to be sure that your card issuer actually received it.
And now the final thing - check your credit report. Once again make sure that it does Not state that your account has been cancelled by the creditor - this will have a very negative impact on your credit score. Mistakes happen. Then - contact your credit card issuer and write another letter. Keep contacting your card issuer until your credit report will be changed.
Credit card utilization ration is another pitfall to consider. For instance, you have got 3 cards with (let's say) 30'000 spread among these cards. Your current balance - 3'000 on all cards). Let's count... Your credit utilization ration is of 10%. If you cancel one of the cards (your aggregate limit will be 15'000) - increasing ration to 20%!
By the way, credit card company may close your account despite you making payments on time. It's up to your credit card company to decide.
In case you feel you can't manage your card, cancelling it can be more important than your credit score. In case you don't want to damage your credit score, you may reduce your credit line. It will be done at your request.
Moreover, narrowing the number of your cards will make it simpler to keep track of your funds. When you have a lot of cards - it may lead to excessive spending.
Whatever the case it be, it is always smart to get a copy of your credit report (whether you are cancelling the card or applying for a new one). There are lots of cases of identity theft nowadays, that you just might not be aware of your credit score changes.
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