- 1). Evaluate whether or not you expect to need a large loan in the next six months. If you intend to take out a mortgage or a car loan in the near future, do not close your credit-card accounts just yet. The effect on your credit score may force you to pay higher rates and receive less-favorable terms on new loans.
- 2). Count the number of your credit-card accounts. Have at least one credit card to use, other than the ones you wish to close. Check that the credit card you use is listed only in your name and not in your spouse's or parent's name. Maintaining at least one card in your name keeps your credit alive.
- 3). Choose which credit-card accounts to cancel. Generally, keeping older cards with higher limits benefits your credit. If you must cancel cards, choose the newer accounts, which are likely to have lower limits. Bankrate.com recommends that you close department-store cards rather than bank cards, as having only department-store cards may hurt your credit. If you use the rewards that come with some cards, consider keeping them.
- 4). Call your credit-card issuer to cancel an account. Request that the issuer report the cancellation as being done "at the cardholder's request," so that your credit appears more stable to future lenders. If you have a particular reason to close the account -- for example, if the interest rate or the annual fee is too high -- explain the reason; the issuer may offer to fix the problem for you.
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