The Right Way to Close a Credit Card

The Right Way to Close a Credit Card

0 Comment

Advertiser & Editorial Disclosure

Did you know that there’s a right way and a wrong way to close your small business credit card? If you do it the wrong way, you could miss out on rewards and benefits, and possibly even incur late fees and interest payments. Use these steps to make sure that you close your credit card account the right way.

Consider Alternatives to Closing Your Account

There are some good reasons why you may wish to close your small business credit card account, but many of them can be addressed by your card issuer. The market for small business credit cards is extremely competitive, and card issuers are willing to go to great lengths to retain existing their customers. For example, if you are closing your account because the annual fee is too high, and you let your card issuer know, then it may waive your annual fee to keep your business. Likewise, if the standard interest rate is not competitive, then your card issuer might be able to offer you a lower rate.

And even if you aren’t satisfied with your card’s rewards and benefits, you can actually have your existing account converted to a different card offered by the same issuer, without having to close your account or apply for a new card. This is called a product change, and you existing account information and balance will be retained, while having the rewards, features and benefits of a different card.

One of the advantages of a product change is that you don’t have to update your account information with your existing billers, which you would have to do if you closed your account. Also, when you request a product change you continue to lengthen the account history in your credit report, which can help your credit score. The primary drawback to a product change is that you won’t qualify for any sign-up bonuses or promotional financing that’s offered to new applicants.

To find out about all of these options, simply call your card issuer and indicated that you are considering closing your account. In most cases, you’ll be transferred to a representative in a special department called retentions that’s authorized to present you with valuable alternatives to closing your account.

Consider Your Rewards 

If you’ve considered the alternatives, but still decided to close your account, then make sure you find out exactly what will happen to your rewards. If your card offers you rewards in an airline or hotel program, then those points or miles will remain valid, regardless of whether you have their co-branded credit card. But if the rewards are in a program operated by the card issuer, then your rewards could disappear soon after your account is closed. For example, you will immediately lose your American Express Membership Rewards points when you close your account, unless you have another account open that participates in the program. However, if you have another American Express card, then you’ll have a 30 day grace period to redeem your rewards. Needless to say, you should always plan on redeeming your rewards while they are still valid.

The Blue Business℠ Plus Credit Card from American Express
American Express is a Nav Partner
Terms, Rates & Fees

The Blue Business℠ Plus Credit Card from American Express

Get rewarded for business as usual. Earn 2X points on everyday business purchases such as Learn More
View More Offers

Decide How to Handle a Remaining Balance 

When you close your small business credit card, you have several options to address your account balance. First, you can simply pay it off. If you have been avoiding interest charges by paying your balance in full, and you pay off your remaining balance, then you will have nothing additional to worry about. But if you have been incurring interest charges, and you pay off your last statement balance, then you may still have remaining interest charges that have been incurred during your current statement period. Those charges will appear on your next statement period, and you can still be assessed late fees and penalty interest rates if you fail to make your payments on time. Finally, you can continue to pay off any remaining balance on your card under the terms and conditions that applied when you closed your account. Technically, your account will still be open, but you will no longer be able to make new charges.

Update Account Info with Billers 

One of the conveniences of having a small business credit card is the ability to have the information on file with vendors that frequently bill you. But once you’ve closed your credit card, you need to contact these billers and provide alternate payment information. Otherwise, you could eventually receive invoices that include penalties for late payments.

Notify Authorized Cardholders 

When you close your small business credit card account, all of your employee authorized cardholders will be unable to make charges. You need to inform them that the account is closed and have them destroy their cards. You may also need to provide them with a new method of paying for company purchases.

Ready to see your credit data and start building better business credit? Check Your Personal and Business Credit For Free (No Credit Card Required).

Rate This Article

This article currently has 3 ratings with an average of 5 stars.

About the Author — Jason Steele is an expert in the credit card industry. He is frequently quoted in national media and his work is regularly featured by mainstream outlets such as Yahoo! Finance, MSN Money, and Business Insider.

Have at it! We'd love to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and protect yourself. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers.

Reviews Disclosure: The responses below are not provided or commissioned by the credit card, financing and service companies that appear on this site. Responses have not been reviewed, approved or otherwise endorsed by the credit card, financing and service companies and it is not their responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *