Why You Should Cancel Your Unused Credit Cards

According to Bankrate.com, the average American has between five and ten credit cards. Some people, however, have more, up to a whopping fifty cards! How many credit cards do you have? More importantly, how many cards do you have that you don't even use? If the answer is one or more, then you need to learn why you should cancel your unused credit cards!

I recently requested a copy of my credit report so I could go over it and make sure it's correct. This is something I do once a year to protect my credit. The report was right, but the number of credit cards I had surprised me! How did I acquire so many since last year? Many of the credit cards were issued by department stores. Home Depot, Lowes, Fashion Bug, and other stores often give you ten to fifteen percent off your first purchase when you open a credit account with them. And, at Christmas time when you go from store to store to do your holiday shopping, you can really get bombarded with these offers! If you're not going to use these credit cards again, it's best to pay off the balances and cancel them, according to Money Management International. Why should you cancel your unused credit cards? That will be that many less credit accounts to keep track of. Plus, you won't be tempted to use them for impulse purchases. It makes more sense to hang onto two or three major credit cards such as Visa, MasterCard, American Express and Discover since you can use those most anywhere. (Fast food chains such as McDonald's, KFC and Taco Bell even take major credit cards!)

Now that you realize you need to whittle down the number of unused credit cards you have, how do you decide which ones to cancel? The answer is, choose only the cards that have a zero balance. If you try to cancel active accounts that have a balance, your creditors may get suspicious and raise your interest rate, for example. So it's best to pay your unused credit cards off first before you cancel those accounts.

If you have more than one major credit card, keep two or three that give you the lowest interest rates and the best overall deals.

Then, canceling your excess credit cards is easy:

1. You can call the customer service number listed on the back of your credit card, your monthly statements, or on your legal agreement with the companies. However, you can very well end up speaking to a long-winded representative who will try to change your mind. If you choose to use this method, be prepared to spend some time on the phone. And, have your credit card number handy for easy reference.

Also, tell the representative you want the closing to be reported to the credit bureaus as "closed at the customer's request." This will let any company who checks your credit report know that your credit wasn't terminated. You just chose to close it.

And, ask that a written confirmation be sent to you showing the account was canceled.

Mark the company name, the date and time on your calendar so you know when you called each company.

2. You can also write-up a letter and send it to every credit card company you need to contact. You can then save copies of the letters to keep in your files.

Here's an example of a letter to cancel your unused credit cards:

John D. Doe
123 Main Street
Anytown, Delaware 12345

March 4, 2XXX

Acme Credit Card Company
PO Box 4545
Spendmore, Illinois 23232-6767

Dear Acme Credit Card Company:

This letter is to give you thirty days notice that I wish to have my credit card account with your company canceled. My account number is 1234 5678 9101 1213, and it has a zero balance on it.

Please be sure to tell the credit reporting agencies this account was closed at the customer's request. Also, please remove my name from your mailing, as well as your telemarketing lists. Furthermore, please do not make my name and personal information available to any other companies.

Once my credit card account is canceled, please confirm this in writing to me.

Thank you!

Regards,

(Your Written Signature)

By canceling your unused credit cards in writing, you'll have more of a paper trail to prove it if a problem arises later.