Canceling a credit card can be helpful to a consumer dealing with debt repayment. Although it provides an alternative to using the available credit, a card should never be canceled with a balance owing on the account. This could lead to negative implications on the FICO score as well as the interest rate on the account.

When should you cancel a credit card? As we mentioned before, never cancel a credit card until the balance has been paid in full. Next, it is time to consider spending habits. Are you responsible with the credit card? If you have problems with regulating spending with use of the credit card than perhaps it should be canceled.

Will a canceled credit card affect your credit rating? Experts recommend that card owners wishing to apply for a vehicle loan, mortgage or line of credit in the next twelve to twenty four months should keep credit card accounts active. This time period is crucial in the development of credit to be approved for these loans.

You see, the longer that you have a credit card – the more impact this holds on the “account history” portion which makes up the FICO score. So, closing a credit card that has been active for two years will indeed drop your FICO score one or two points. Is canceling your credit card really worth it? Or, can you curb your spending, take control of the card – rather than letting the card control you?

Experts recommend putting the card on ice, literally, freezing it, and allowing the card to thaw as you give your purchase a second thought. Other methods include keeping the credit cards in a locked filing cabinet or safety deposit box, to avoid easy access to swiping the credit card.

Should you wish to cancel your credit card, there are three steps to canceling a credit card:

•    Contact the credit card company via the telephone to cancel the credit card.
•    Send a written confirmation to the credit card company. Ensure that this is received from them, by conformation through the email from the credit card company.
•    Next, up to a few weeks later, check your two-to-four weeks later to ensure that the account has been removed.

Be sure to keep all account information until the card has been permanently closed, and this has been verified by the lending company.

If the credit card is going to remain inactive than there are many benefits to canceling the credit card. The credit card being closed will reduce temptation of shopping trips that are not afforded. As well, canceling a credit card allows the card owner to reduce the chances of the card being used by an unauthorized user, or be a victim of identity theft.

The choice is up to you, to cancel or not to cancel. When making the decisions, don’t just think about now; think how cancelling the card will affect your chances of gaining future credit.

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