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February 9th, 2010

Planning on Cutting Up That Credit Card?

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During my morning scan of Twitter, I came across a tweet from personal finance gurus Ken and Daria Dolan:

Cutting up your credit cards? Great! But don’t forget to close the account. Our sample letter makes it easy.

The recession spawned a national trend which saw thousands, if not millions, of American shift from spenders to savers. High charges and fees imposed by credit card companies made the transition all that much easier. But before you pull out the scissors and kiss that plastic goodbye, remember that merely cutting up your card doesn’t mean your account is closed.

Sending a credit-card cancellation letter will ensure that your account is properly closed, and the proper authorities are notified.

The Dolans have provided an easy-to-use template to follow when writing to the credit card company:

[Your name]
[Your address]
[Date]

Dear Sir or Madam:

Please let this letter serve as notice that I am terminating my credit card account effective immediately. Please close the following account:

Credit Card Company: ____________
Account Number: ________________

Please send me written confirmation that my account has been closed. Also, please confirm that you have notified all appropriate credit card bureaus that this account was closed at my request.

Thank you for your prompt attention to this matter.

Sincerely,
[Your Signature]

READERS: How many credit cards have you canceled recently?

What if I don’t want to cut up my cards — I’ve heard that closing accounts may lower my credit score? If so, GetRichSlowly.org will tell you the impact closing credit card accounts can have on your FICO score.

**You may want to purchase a return receipt at your local post office to ensure that the credit card company has received your letter.**

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4 Responses to “Planning on Cutting Up That Credit Card?”

  1. Welfred Says: February 12th, 2010 at 5:03 am

    This is great. maybe i can use this in the long run. as of now i am enjoying using my credit cards.

  2. Tim Manni Says: February 12th, 2010 at 10:47 am

    Welfred,

    Thanks for commenting. This template is always good to keep in your files.

    Hope to hear from you again soon,
    Tim

  3. Mitch Says: February 15th, 2010 at 2:52 am

    I found that other blog post interesting as well. Of course you know my long standing position on this one, that being that it’s best to kill those credit cards if you feel you’re not being treated fairly and don’t worry about the credit scores.

    Having said that, making sure you’ve told someone that you’re canceling your account is always a smart and savvy move, and your form will help a lot of people. Thanks Dolans! :-)

  4. Tim Manni Says: February 15th, 2010 at 3:11 pm

    Mitch,

    Thanks for commenting. If you’re going to cancel, make sure you do it right.

    Thanks,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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