There are numerous reasons a business may want to cancel a credit card. These reasons include the need to consolidate your debt, the need to improve the debt holder's credit score (when applicable), and an opportunity to pay a lower interest rate elsewhere. Canceling a business credit card is not an inherently difficult process. However, if you are looking to close a card, there are a few important things you need to keep in mind.
Cancel Your Business's Credit Card in 5 Steps
1. Close Your Accounts Completely and GraduallyBefore you decide to close any accounts, it is important that you pay your entire balance. Though some credit card companies may allow you to close cards while you still have an outstanding balance, this doesn’t mean you can avoid paying off your debts. Additionally, if you’re looking to cancel multiple credit cards, it is a better idea to cancel them gradually. When deciding which accounts you want to cancel first, it’s better to close new cards before old cards, and high interest cards before low interest cards.
2. Communicate With Your Credit Card Company Throughout The ProcessThe easiest way to avoid future entanglements is with clear communication. Even if it seems like these cards are something you can cancel on your own, maintaining a clear line of communication with your credit card company is going to make the entire process easier. Keep track of all emails, phone calls, and pieces of mail you’ve received regarding the closing of your credit card. Additionally, you may even want to follow up by writing a formal letter. If something ends up going wrong, you’ll want to be able to correct it and rid yourself of personal liability. But even if nothing goes wrong, it still doesn’t hurt you to be prepared.
3. Monitor Your Credit ScoreDepending on the kind of business you’re running, your personal credit score could be directly affected by the actions of your business. Though the damage from business actions will not be as severe as personal actions, any negative impact on your credit score is something you should avoid. Your personal credit score is a summation of several different variables. If closing a credit card has a negative impact on your credit score, it may take several weeks to actually appear. Proactively monitoring your credit score can help you correct potential errors and better understand your current financial position.
4. Pay Attention to Small DetailsEven once you have confirmation from your credit card company that your card has been canceled, that doesn’t mean your work is complete. Often times, it is the smallest details that can lead to future problems.
- Cut up your credit card before throwing it away. Cutting up your credit card is an easy way to prevent future harm. Even if the card itself is no longer valid, the numbers (and corresponding personal information) on the card are still something you want to keep private.
- Be sure to cancel any automatic payments. Forgetting to cancel automatic payments can result in unnecessary late fees, interest payments, or damage to your credit score.
- Let everyone with access to the card know that it has been canceled. To avoid future financial distress, be sure to remind every employee with access to the card that these numbers are no longer valid.