Tips To Closing A Credit Card Account

Credit cards can be a good option to pay for certain things, but if abused, you may have to use cash loans now to get your financial life back on track. There may come a time in your life when you need to close a certain credit card account. However, you should tread lightly, as this can have an adverse effect on your credit standing.

There are a number of reasons to close a credit card. If you have too many or opened one with high rates and expensive fees, these could be viable excuses to get rid of a card. Many lenders examine your credit utilization to determine if you qualify for a new line of credit.

If you have many different cards, but don’t use certain ones very often, this could prevent you from qualifying or leave you with more expensive terms.

Where Do You Start?
If you need to close a credit card, it’s often best to get rid of the most expensive one first, recommends MoneyBlueBook.com. In addition, make sure to space out when you close your credit cards and only do one at a time.

To determine which credit cards costs you the most money, first examine the different interest rates. This is the amount of extra money you have to pay if you carry a balance from month to month.

However, this shouldn’t be the only factor your examine. Also consider the different reward programs. Some perks only kick in after you spend a certain amount of money or if you shop at particular stores. If the amount you have to spend outweighs the benefits, this could be an indicator the car needs to go.

Pay Down Your Debt
If you try to close a credit card that is carrying a balance, this will be a serious red flag to lenders in the future. Just because you close an account, doesn’t mean other financial institutions can’t see its history later on down the road.

Instead, you should try to pay down your debt. This should reflect better on your credit report, and will show lenders you took the initiative. However, this is sometimes easier said than done.

To start paying down your debt on a particular credit card, dedicate the major of payments to it, while maintaining minimum payments on others. This may require your to shuffle around your budget, and you may need to eliminate out a few unnecessary expenses in the meantime.

Approach Your Lenders With Caution
In order to cancel your credit card, you will need to talk to your lenders. However, you should do this with caution. Once the company catches wind that you are trying to leave, they may try to talk you out of it. Make sure to take a solid stance and remember that it’s probably in your best interest.

Instead of getting sucked in over the phone, consider writing an email. This form of communication often gives you more time to formulate your request and responses and you won’t be put on the spot. Just make sure to retain a copy of these email for your record for the future.

Your Account Is Closed, Now What?
Once your account is closed, you still need to be cautious about materials that have it’s information. This includes old cards, statements and bills. While paper can easily go through a shredder, you may need to take extra measures with the card.

Use a pair of scissors to cut up the card into small pieces. The dispose of the pieces in separate locations so a crafty fraudsters can’t piece it back together and wreak havoc on your finances.…

Dealing with Debt

Dealing with debt can be difficult, especially if that debt is high-interest debt such as a payday loan. While you may be able to pay off a payday loan rather quickly, it can be tough to deal with other sorts of debt like out-of-control credit cards.

Because so many people find themselves in a tough spot right now, there are many companies offering services to help you deal with debt. In some cases, these companies are legitimate and helpful. In some cases, they’re shady, operating within the law but in an unethical fashion. In other cases, they will lie to you outright.

Whenever you hear a sales pitch from a company that wants to help you deal with debt, you need to listen carefully. Here are some warning signs:

Watch out for overpromises. Yes, some companies can help you to pay off your debt for a smaller amount than what you owe. Watch out for a company that guarantees that it will happen, however. There is no guarantee that any given creditor will be willing to accept any sort of partial payment. Instead, contact your creditor yourself, and find out if they have options for you.
Pay attention to fees. Some debt reduction companies charge a hefty fee. Even if they claim it’s only a “small percentage” of what you’re paying, find out exactly how much those fees are. Whether it’s a regular monthly service fee, a fee for establishing an account or a final fee.
Keep communication open. If a company tells you to stop communicating with your creditors, watch out. You may still wind up with late fees, interest and other charges. Your credit score may also be hurt.
Be realistic. If a company tells you that creditors won’t sue you for not paying on an unsecured debt, be careful. Creditors can and do often sue. If they win a judgment, they can even garnish your wages.
Know how credit reporting works. If a company claims that they will “fix your credit report,” they aren’t being exactly honest. The only way your credit report can improve is if you ask the credit reporting company to correct errors and if you do better about paying your credit.…