Protect your finances and your credit rating by learning how to cancel and close a credit card account the right way
Taking scissors to your credit card may stop you from using it, but it doesn’t mean that the account has been closed. Open credit card accounts can impact your credit rating, accrue fees, and leave you open to undetected fraud.
If you no longer have a use for your credit card, learn how to cancel and close it the right way in order to avoid problems in the future.
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The ANZ Low Rate credit card Mastercard offers a low interest on balance transfers and purchases.
- $58 p.a. annual fee
- 13.49% p.a. on purchases
- 0% p.a. for 18 months with 3% balance transfer fee on balance transfers
- Cash Advance Rate of 21.74% p.a.
- Up to 55 days interest free
- Minimum Income Requirement of $15,000 p.a.
Tips for cancelling your credit card
Using the available credit may have been easy, but there are certain steps that you must take if you want to ensure that the credit card is no longer available for your use. It’s one thing to no longer have the card in your wallet you also need to make sure that one call won’t have a replacement re-issued to you.
- Pay off your balance. If you attempt to cancel a credit card with an outstanding balance, the bank could reserve the right to increase the interest rate or demand that payment in full be made immediately. Before you let them know of your intent, make sure that you have a zero balance on the card.
- Call first. Every bank will have a different system for closing an account, so it won’t hurt to call ahead first to find out what yours is. You could get lucky and find that closing the account is as easy as making that one phone call.
- Stand firm. You have made a sound financial decision, so stick with it. Not all credit card providers will be willing to let you go without a fight, especially if you are a frequent credit user. Keeping you is costing them less than trying to find customers to take your place. Don’t be surprised if your phone call is forwarded to a retention specialist whose sole job is to persuade to stay with your current card. Politely decline their cajoling and reinforce your desire to have the account closed.
- Send written notice. In addition to the phone call, send the bank written notice of your request to close the credit card using registered mail. In the letter you should list the name on the account and the account number along with your request to cancel.
- Cancel and direct debits. Make sure that you change the details for any direct debits that were being paid using the credit card. A payment request from a direct debit could reactivate the card even after the issuer has received written notice that you wish to cancel.
What are the benefits and drawbacks of closing my account?
Closing a long standing credit card account is not an easy decision to come to, and will have repercussions that you may consider to be good for your financial as well as risky.
- Reduce temptation to spend. Without an available line of credit, you may not be as tempted to make frivolous purchases.
- Improved credit rating. Too much revolving credit could hurt your credit rating, especially when it comes to applying for large loans like a home mortgage.
- Less fees. You could be saving money on annual fees by eliminating the number of open credit cards you have.
- Credit availability. If your credit rating is not stellar you may find it difficult to be approved for another credit card product in the future. In that case it may be better to keep the account open and use it sparingly and wisely in order to try and reestablish a good credit history.
- Emergency assistance. Credit cards are a convenient method of covering an expense in the event of an emergency. Not having one available could force you to look at other more expensive options such as fast cash loans.
As your financial needs and position changes, it is possible to find that certain credit cards you have obtained no longer meet your needs. Rather than having a collection of open accounts that you no longer use, you should take the time to cancel those cards. This allows you to take better control of your spending habits and your credit report so that you can work on building a better financial future.Back to top
Frequently asked questions
How will I know if my account has been closed?
You should receive a notification of closure from the bank when you close a credit card account. Save this paper in case there is ever any question in the future about the account.
Will I be charged the annual fee if I cancel the credit card close to its due date?
To avoid this, you should make sure that there is no balance on the card and advise the bank in writing using registered mail of your intent to close. If you have confirmation that the request was received prior to the annual fee anniversary date, you should be able to dispute that charge if the bank were to add it to your statement.
What happens if I don’t cancel the card but just never use it?
The credit card will still accumulate debt from the annual fee. You also put yourself at risk for fraudulent spending, especially if you are not regularly checking the status of that account.
I am getting ready to buy a house, but am being advised to close any credit card accounts that I don’t need or use often, why?
One of the items that lenders look into is the amount of credit available to you. Too much is considered a risk as the bank feels that once your loan is approved you will than rack up a large credit card debt using those available balances.