What Happens When You Close A Credit Card?
That may be several reasons why you want to close the credit card you have. Perhaps you have had a bad experience with the card by spending too much money and want to safeguard yourself from a similar occurrence or maybe you are trying to upgrade to a fresh rewards credit card. Some people like to close their credit cards because they are not using them as frequently as before. Regardless of the reasons you have decided to close your credit card you should understand what will happen when you decide to close a credit card.
What happens when you call to close a credit card?
Closing an old credit card will take much more than a pair of scissors to cut the card up in two. Once you have decided you want to close a credit card you will need to call the card issuer using the contact number provided on the back of the credit card and intimate them about your decision. You will be required to go through the formalities of having the account canceled without which you will not be able to close the credit card.
Occasionally your credit card issuer will just cancel the card without any questions but generally, they will use methods of retention and make an attempt to convince you to change your mind. You may be transferred to the customer retention department where you will be put through a further set of questions with the intention of making you retain the card. You may even be offered additional perks including credit card rewards and bank transfer options in order to convince you to stay back.
If you are not interested in any of the offers made it is fine for you politely to ask to cancel the credit card. You must take care to remember that the account you close is gone for good.
The credit bureaus will be notified of the closure
The credit bureaus will receive information that you have closed a credit card within a month of the closure. The action taken will be reported to the credit reporting agencies which are Experian, Equifax, and the TransUnion. The fact that you have decided to close a credit card does not mean the positive impact of the card is over.
Accounts with zero negative remarks can remain on your credit history for a period of 10 years after the closure according to Experian. Therefore if your credit card account does not have any negative remarks you can rest assured of positive signals for a number of years to come which is in any way true regardless of whether you close the credit card or not.
Your credit scores may be impacted slightly for a temporary phase
Closing a credit card can have a negative impact on your FICO scores which are often used by most lenders when approving loans of any kind. This is because the scores are determined by several factors which are complex to understand whether your scores move up or down.
The factors which could affect your scores when you close a credit card could be related to the amount of money that is outstanding in contrast to your credit limits and the duration of your credit history. If you do not have any debts outstanding the utilization of your credit limits will be zero and your scores are not likely to be affected at all. However, the results will be different if you have debts and loans of other types because they can instantly push up your utilization and a factor of this type can hurt your credit scores.
When you decide to close a credit card you are also affecting your credit history particularly if the card you are closing has been with you for quite a long time.
You must consider these factors before you decide to close a credit card and go ahead with your plan only if you are convinced it is the best option for you. On the other hand, you can cancel any automatic charges linked to the card and retain the old account because it lengthens the average age of credit you have been availing over a period of time. Consider your options carefully before you decide to close a credit card because you are likely to face some consequences for your actions.
More in Debt
These Fashion Houses Went from Bankruptcy to Billions – Part 1
In fashion, everything is in a flux and nothing is certainly permanent. Even if creative directors leave their posts and the...November 16, 2018
Wall Street Lowers a Risky Rift with Saudi Arabia
Rising tensions between Saudi Arabia and the US could translate into problems for American business interests and the economy is already...November 14, 2018
Super-yachts for the Super-rich: 2018 Edition
The greatest number of the globe’s most luxurious and largest yachts in this country, will be on show during the Fort...November 13, 2018
Crowdfunding Tropicfeel can Lighten The Load Off Your Next Vacation
Lucas De Gispert and Alberto Espinós are serious travellers and they love it. With their base in Barcelona, Spain, they have...November 12, 2018
You Won’t Believe How Much These Pieces of Jewelry are Worth
Jewelry has always played a very central role in our culture for many millennia, whether we speak of remote Ancient civilizations...November 9, 2018
The Richest Pastors in the World: Private Planes, Big Real Estates and Fancy Cars Galore!
It was once said by Scientology founder, L. Ron Hubbard, that a person who wants to get rich should start a religion....November 8, 2018
Tame the Beast that is Your Credit Card Debt
Let’s face it, credit cards are a handy tool but they also give us anxiety. So while collecting credit card rewards...November 6, 2018
Fixing the Gig Economy with Crowdfunding 2.0
If interested in small businesses or startups, you have surely heard the term initial coin offerings or ICOs. TechCrunch opines that the...November 5, 2018
How Charles Lazarus Turned Toys R Us Into a Toy Empire
On June 29, 2018, the biggest toy store in the country finally closed all of its doors worldwide, ending the toy...November 2, 2018