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| The Basics | How to cancel a credit card
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Considering canceling a credit card? Here's how to do it without damage to your credit report.
By Bankrate.com
Whatever your reason for getting rid of a credit card, you'll want to make sure you do it thoroughly and that no harm is done to your credit report.
First, don't try to cancel a card while you're paying the balance. Cancel the card only after you have paid off the balance in full.
"There isn't a need to cancel that account until you're through with it," says Jean Brannan, community outreach coordinator for Consumer Credit Counseling Service, in West Palm Beach, Fla. She adds that you have to employ self-discipline and stop using a card while you're paying off the balance.
OK, let's say you have paid off a card's balance and you want to cancel the account.
Brannan suggests that you do the following, in order:
Notify the issuer by phone
Your issuer's customer-service number will be printed on the back of the card, on the monthly statement, or both. Call that number, confirm that your balance is zero, and notify the customer-service representative that you're canceling the card. If you truly intend to cancel the card, hold firm if the rep tries to talk you out of it by promising lower rates or fees.
If you can, Brannan says, find out the name of someone to send a confirmation letter to. At the least, ask for the address.
Follow up with a letter
Write a short letter to the card issuer. "If you can get a name so you can send it directly to someone, that is better," Brannan says.
The letter should say that you're closing your account and that you want your credit record to reflect the fact that you requested that the account be closed. Provide your name, address and account number.
Send the letter by certified mail or return receipt requested. That way you can prove that the card issuer received your letter, Brannan says.
Then, wait a month.
"You can allow as much as 30 days for the closing of your account," Brannan says. "Then get a copy of your credit report and make sure it says 'Closed at customer's request' and that (the account) actually has been taken off your credit report."
Check your credit report
You don't want your report to say the account was "closed by creditor," because that reflects negatively on you.
If the card issuer mistakenly reported that the issuer, not you, closed the account, you'll have to return to the beginning. Call the customer-service department to report the mistake, follow up with a letter sent by certified mail (include a copy of the letter you wrote requesting that the account be closed), and check your credit report again.
"Remember that a credit report is your credit history," Brannan says. "The information is submitted by lenders, but it's your individual responsibility to make sure it's correct."
Believe it or not, it's not the credit bureau's responsibility to make sure that your credit report is correct. Credit bureaus report what creditors tell them. So if your credit report is inaccurate, don't ask the credit bureau to fix it. Ask the creditors to correct inaccuracies and update the credit bureaus.
Experts recommend that you check your credit report annually to spot inaccuracies and detect identity-theft problems. Check your credit report before buying a house or car so you can.
Return to "How that huge credit limit can hurt you."
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MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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