How and When to Break Up With a Bad Credit Card

Feb 14, 2017

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Update: Some offers mentioned below are no longer available. View the current offers here: The Amex EveryDay® Credit Card from American Express, Citi Simplicity Card

This Valentine’s Day, you may be counting all the reasons you love that special someone in your life. Perhaps you’re sending an impressive bouquet of flowers or planning a romantic date night — but in any case, it’s time to evaluate another important piece of your life: you and your credit card’s courtship.

Signs It’s Time to Call It Quits With Your Credit Card

That piece of plastic in your wallet may have tempted you with a low introductory interest rate or a lucrative welcome bonus — but now, you might have identified reasons that the credit card isn’t the right fit. Maybe the annual fee isn’t worth it. Maybe there are better options that will pay you more rewards based on your typical spending habits. Maybe your APR is well above the national average of 16.43%. And in a worst-case scenario, maybe you just noticed some suspicious charges on your card.

If your credit card doesn’t feel like a love match — or even a decent friend with benefits — there’s good news: you can break up with it.

1. Understand the impact of closing your card.

Breaking up with a credit card is a more serious decision than when you called it quits with that high school fling (you’re better off now, trust me). It will impact your credit score. Depending on your credit history, that impact may be significant. So before you move forward with your break-up plans, I recommend using a tool to see how it will change your credit score. Chase’s Credit Journey tool allows users to test what a range of hypothetical scenarios — including closing a card — will do to their credit scores. You’ll also be able to see your credit score for free.

2. Rearrange all your automatic payments.

Review all the automated payments linked to your credit card to make sure you don’t miss a due date. Image courtesy of Shinji Photographer via Getty Images.

If you’ve linked your credit card to make automatic monthly payments for your cell phone bill, your cable bill or other recurring expenses, you’ll want to cancel all those payments. Otherwise, you’ll have to deal with the awkward phone call from one of those companies asking what went wrong.

3. Pay or transfer your balance.

If you’re carrying a balance on your credit card, you won’t be able to leave it in the past. The best route is to pay your entire balance to turn the entire relationship into a distant memory. However, if you can’t pay down your entire debt, it’s important to compare the best options for balance transfers. The Chase Slate Card gives you 15 months of 0% interest and no transfer fee within the first 60 days. The Citi Simplicity Card will give you 18 months of interest-free financing (then a variable APR rate of 15.99%-25.99% applies), and the Amex EveryDay® Credit Card from American Express offers 15 months of interest-free financing (then a variable rate of 14.99%-25.99% applies). The Simplicity card comes with a 5% balance transfer fee and the Amex EveryDay does not include a fee for balance transfers (if transfer is requested within the first 60 days of account opening).

4. Review your available rewards.

While your credit card relationship may be coming to a close, take one more opportunity to celebrate the memories you had together by cashing in all your reward points — but note that points and miles already in a third-party account (such as a hotel or airline program) are yours to keep after you close a co-branded card. If you don’t have any reward points, take this moment to applaud yourself for the decision to call it quits. You’re going to find a card that makes you happier (see the final step).

5. Make the call.

Call your bank to close your credit card. Hopefully, the customer service team won’t give you too much pushback. Image courtesy of gradyreese via Getty Images.

While you can do almost anything online, closing your credit card isn’t as simple. In most cases, you’ll need to contact the customer service number on the back of your card. Be prepared for the potential pushback. We don’t want you to go, they’ll say. Perhaps they’ll even offer to be a better partner in personal finances by waiving an annual fee, but if you’ve made it this far, stay strong. Let them know you want to cancel your account. This may also be a good opportunity to ask about product changing to a no-fee version of the card, assuming you don’t mind keeping the account open — if the account number remains the same, you’ll continue to build credit history.

6. Monitor your credit report.

It may take a while for your credit report to reflect that the account has actually been closed. I recommend monitoring your report to make sure that the cancellation was successful. Federal law entitles you to a free annual report from each of the major three reporting agencies, so you can check on your report for free every four months by bouncing from one agency to the next.

7. Cut up your card.

Be sure to completely destroy your credit card to avoid potential identity theft. Image courtesy of BernardaSv via Getty Images.

Once you’re sure the card has been closed, cut up your card to mitigate the risks of identity theft. While you’re at it, shred any paper statements that you no longer need, too.

8. Find a new card that will love you better.

Now, it’s on to the exciting part: finding a new card. Luckily, determining the best credit card for your lifestyle is much easier than finding an actual romantic partner. You won’t have to endlessly swipe right or go on a bunch of awkward first dates. You can start by reviewing these top travel rewards credit card offers.

Have you recently decided it was time to break up with a credit card? What were your warning signs?

Featured image courtesy of skynesher via Getty Images.

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