Cancelling Your Credit Card: Why Cutting It Up Is Just Not Enough

It’s time to say goodbye to your credit card. You’ve had enough of the blackout dates & poor customer service and your shiny new rewards card just arrived. Or, maybe you’ve finally taken advantage of a balance transfer to get a lower interest rate and now need to cancel your old account. Cancelling a credit card account is a fairly simple process, but there are definitely some important things to do before sending that old card through the shredder.

5 Things To Do When Cancelling Your Credit Card

• Cancel Any Recurring Monthly Transactions – Before you wish your old credit card adieu, you’ll want to update your payment info with any merchants that automatically charge you each month. These recurring charges could be a gym membership, a Netflix account or a cellphone bill on autopay. Just cancelling your card does not remove your obligation to pay for the service, so you’ll need to contact the merchants separately if you wish to cancel those payments as well.
• Call The Credit Card Company – After updating automatic payments with your new card info, you’ll want to contact the issuer of your old credit card and formally request the account be closed. Most of the time, calling their customer service number and cancelling by phone is enough. Although, some issuers may require a formal request in writing. You must officially cancel the card with the issuer in order to close the account. Just cutting up the card still leaves the account open in your credit report & will count as available credit.
• Check & Keep Your Final Statement – Your last statement of account should show a zero balance, since you either paid off the full amount or transferred the balance to another credit card. There may be situations where charges will appear on your statement even after you have closed the card account. Generally, these are transactions that were still pending when you cancelled the card. Keep the final statement for your records, indicating the account was truly closed.
• Review Your Credit Report – It normally takes a month or so for the change in account status to appear on your credit report. After that time frame, contact both credit reporting agencies – Equifax Canada and TransUnion Canada – to ensure they list the account as closed.
• Cut or Shred Away – Now comes the fun part. Once you’ve completed all the steps above, it’s time to destroy the plastic remains. You can cut, shred or even repurpose your old card. Just make sure it’s the right one…

When activating a new credit card to replace the old card do not get confused and cut up the new credit card. I may have just done this.

— Kerry K. Taylor (@squawkfox) November 6, 2013