If you want to close out your credit card account, then you need to execute it correctly. Keep in mind that the wrong move may cause hurt to your credit rating. In this post, let us discuss some important points to consider before cancelling a credit card:

Be certain with your decision. First, seriously consider whether cancelling your credit card would be the best solution. For instance, if you are having a difficult time catching up with your credit card payments, then cancelling is not a solution. Why?

If you cancel your account while you have unpaid charges, you will be inflicting very serious damage to your personal credit history. So before taking the next step, you must first work on zeroing in your balance.

Then again, if you are not using that credit card because you have other cards with better rates, then it is sensible to cancel the account to protect yourself from identity theft and fraud; and from the temptation to overspend. However, before cancelling, make sure that you will not be leaving any balance in your account.

Make sure you’re not deleting your credit history. It is also worth considering how long you’ve had your credit card. If you have been using it for a long time, then you might as well keep your account active.

The reason for this is that the length of credit history is a significant factor in your overall rating. But if you cancel your old credit card, you will be erasing the oldest parts of your credit history as well. Consequently, cancelling can pull down your credit score.

What if your old credit card has a high interest rate and that is the reason why you want to close it? It is a good idea to call up your issuer and request for a lower interest rate. If you let your credit card company know that you want to cancel your account because of the rate, your request will most likely be granted.

However if not, one smart strategy is to limit your credit card use to smaller purchases. Be sure to pay your charges in full immediately to avoid the interest rate fees. By doing so, you can still keep your credit card without damaging your credit.

Cancel your credit card correctly. First, call up your credit card’s customer service number and request for cancellation. Expect the representative to ask your reason for cancelling and to try to change your decision. If you have decided, be firm and simply say that you want to proceed with the cancellation. Ask the representative the name of the person to who you can address your cancellation letter.

Next, send the letter to your credit card company via registered mail to make sure that your letter will not be lost. Be sure to state in your letter that you want your credit report to reflect that the account has been "closed upon your (the account holder) request". Keep a photocopy of your letter for your reference.

After a month, order a copy of your credit report from the three major credit bureaus to confirm that your credit card account has been taken out and that there is a statement that say "closed upon the account holder’s request".