When applying for a credit card, the decision is usually almost instantaneous. This is convenient. Unless you realize you don’t want a card in the end.
Also, keep in mind that you will lose your eye-catching welcome bonus. Issuers tend to frown at people who open and close their accounts within a year after they get it to prevent practice called card stirring.
Before canceling your newly approved credit card, understand what happens when you take this step.
Your credit score may still drop
The issuer would have enquired your credit score before approving your credit card account. This type of strict enquiry has the effect of lowering your credit score. This indicates that you are likely to get additional credits.
New credits you think you’ll potentially take introduce some uncertainty to the lender as it’s not clear that the need for this credit and how you’ll handle it. Therefore, rigorous surveys can have a negative impact on your credit score.
Also, if you are looking to open multiple new credit card accounts, for example, and many harsh inquiries will have a greater impact than a single inquiry.
Cancelling your card immediately after it is approved will not remove any harsh inquiries from your credit report. Any damage to credit remains. Fortunately, you can usually only use a small number of points. That said, the impact may be greater for many people with no credit history.
You miss a lower credit usage
In addition to avoiding fallout on negative credit scores, you can also enjoy the positive credit score effects by holding new cards, even if they are minor.
One will boost the total amount of credits available. This reduces your credit utilization rate, or how much of your available credits you are using. Of course, this only works well if you are disciplined to not acquire additional debts on your new credit card.
Cancelling a new card will result in loss of access to a new credit line and the credit benefits that come with it.
What to do before cancelling
After all, you may still decide to go ahead and cancel. This may be because when you actually mailed your card, it turns out that your terminology wasn’t what you expected. Perhaps the actual credit limits are different or the annual rate won’t appeal to you. You will find such details by going through fine printing.
Still, if you want to keep your card, you can talk to the issuer to see if you can negotiate terms that you are not satisfied with. Also, if you change your mind about paying annual fees, you can ask the same issuer to downgrade to another unpaid card.
If the issuer does not negotiate with you, you will need to cancel the new card just like any other card you have.
How to cancel your card
The process of canceling a credit card you just applied will vary depending on where you are applying.
How to cancel a still-pending credit card application
According to Capital One, one of the leading credit card issuers, you can cancel the credit card application if it is still pending. This includes:
- If you apply via a bank branch or via postal mail, you can contact the issuer and cancel the application.
- Certain applications will also be manually reviewed when submitting online. In this case, you may have time to contact the issuer and let them know that they don’t want the card anymore.
How to cancel an approved credit card application
If you’ve already been approved for the card, your only way is to cancel it just like any other card. This is what you should do:
- Please repay your card’s outstanding balance and make sure there are no pending fees. This will help you avoid the remaining ghosts of interest.
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Call your card’s customer service number and talk to your representative about how to close your account.
- Make sure there are no other fallout from this closure. One, make sure that if this is a card carrying annual fees, you are not responsible for paying it.
- Keep a record of this interaction and ask for confirmation of closure. Card issuers must send you a follow-up letter regarding the closure of your account.
- Please check your credit report to make sure your account is closed.
Card issuers can also cancel their credit card at any time. It may not even inform you of an imminent closure, especially if you are late for your payment or otherwise not hanging out with your card contract. The closure may be because you have not used your card for a long time or are not willing to agree to a change of terms.
Conclusion
You can cancel your account even if you decide that you do not want to retain your credit card after it has been approved by the issuer. Think a little about the outcome before canceling. If you decide to cancel, be sure to obtain written confirmation of your account closure.
