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It might appear to be a good idea on the surface to close outyour old credit card accounts that you do not use any longer. However, this can actually hurt your credit in some cases. You need to carefully consider if closing the account really is the best option for you. Closing old accounts will reduce the amount of available credit you have access to and will also impact your credit to debt ratio, which are just some of the things that affect credit.It is also important to note that the length of time you have had a single line of credit with good history attached to it can do a lot to help your credit score. In general, the only times you will want to close out an account are as follows: Accounts that become maxed out. When you have a card maxed out and the line of credit fully used, you will not be able to close the card without first paying off the balance in full until it is at zero. If you can't afford to make the necessary payments in order to pay the card off, you might qualify for what is known as a balance transfer. This is what happens when the balance of your card account is transferred to another credit card. Transfers like this are usually done in order to get out from under a card that has high interest rates, large user fees, or other costs that you need to get out from under. Balance paid off each month. If you pay off everything you put onto the card each and every month, which means you don’t carry a balance, you can easily close that account. If you have several cards that you do this for, it is recommended that you close the accounts that have the highest annual fees or the highest interest rates. Card that have a small balance. When you are dealing with credit card accounts that have small balance each month, you should close the accounts with the highest interest rates and the least favorable terms. Check your account agreement and term agreements to see how the rates are figured and how fees are handled. If you can only close out a few cards, pay off the ones with the least desirable terms and close those accounts and be sure to keep up with good payment practices on the cards you do keep open. Cancel Automatic Payments Before you make the move to cancel your line of credit and your account, make sure you contact any company that you make payments to out of that account via automatic payments. Let them know you are switching accounts. If necessary you may need to pay via check or in person during the transition period between when one account is closed and the next one becomes active. If you do not do this, an automated payment may come into the close account and that can result in fees, bounced payments, and great deal of heart ache and expenses. Change Bill Payments As with automated payments, make a list of the places you commonly use that credit card at for bill paying. Letting them know ahead of time that the account information will be changing can help keep them from flagging your purchases when suddenly your card and credit information has changed from what they have on file or in their system. Get Confirmation in Writing When you call or speak to someone about canceling your credit card account, and especially if you send them the request via mail letter, you need to request written confirmation that the account has been closed. You need this for your records in case anything comes up later on for fees or charges. Ask them for documentation of when you filed the request, when the account was paid off, when it was officially closed, and when you were notified of the account closure. It is good in this case to be a little paranoid as it can help protect you from confusion, mistakes, human error, or alert you to fraud and ways to prevent credit card fraud from happening on that account. It is also a smart move to get a credit report ordered 3-4 weeks after the account closure. This is especially true if you've closed more than one account because it helps you to be sure that everything was done as requested, nothing was missed, and no mistakes were made. If something did go wrong, you want to catch it and get it resolved as quickly as possible. The sooner you check the sooner you will know something is awry and the easier it will be to fix. Amy Johnson is an active blogger who is fond of writing articles on credit monitoring and educating people to monitor their monthly credit report to prevent you to be a victim of credit fraud. Follow her on Twitter to know more on how to close your credit card account.
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