Are you done with one of your credit cards? If so, then you might be looking to close the account. It sound's like a simple task, but there can actually be much more to it than people think. First, you have to consider your reasons for closing your account, and then you have to do it the right way.
1. Decide If You Actually Should Close a Card
You may want to begin by asking yourself why you are closing your account, and decide whether this step is really necessary. For example, some people decide to cancel a bunch of their credit cards because they think that it will improve their credit score. In fact, closing your credit cards may have the opposite effect by reducing your debt-to-credit ratio (how much debt you are carrying versus how much credit you have at your disposal). In addition, the closure could wind up ultimately hurting the age of your credit history.
Other people will cancel their cards just because they are not being used. (Here again, cardholders risk lowering their credit score, so you may want to check if yours can handle a hit. You can pull your free annual credit reports on AnnualCreditReport.com or, if you want to monitor month to month, you can get your credit scores for free every 30 days on Credit.com.) But if your card charges an annual fee, and you have determined that paying the fee is no longer worth it, then closing your account can make sense. Other good reasons for closing a card can include excessive fees and poor customer service.
2. How to Close Your Account
Once you have concluded that you want to close your credit card, the next step is to contact your card issuer and inform them of your decision. When you tell your card issuer that you are calling to close your account, the front line customer service representatives may transfer your call to another department called "retentions." (A hint that this is happening is the representative saying they are transferring you to a "specialist.")
The mission of a retention specialist is to keep you from closing your account. To achieve that goal, the representative will ask you why you are closing your account, and try to offer you reason to stay. For some cardholders, these retentions specialists can be useful. For example, if you tell the retentions specialist that you are canceling because the annual fee is too high, then you might be offered a one-time waiver of that fee. And, if you indicate that you are dissatisfied with your credit card's rewards program, then you might be offered some amount of bonus points, miles or cash back in return for your continued use of the card. Like the sign-up bonuses offered to new customers, these offers may require cardholders to spend a certain amount of money within a designated time period.