Does a Lender Cancel Your Cards When They Are Paid Off?
Are you in a position where you consider canceling all your cards because you really need to improve your financial situation? Many of us these days tend to have more than one credit card, sometimes even three or four!
Initially it may have seemed a good idea, perhaps to pay for that holiday you've been hoping for, or perhaps to help with the costs of moving home, or even a new car. However it never quite worked out how you planned did it?
Do you remember thinking "I'll pay it off quickly" or maybe "I'll close my old account when I open this one"? It's a very common situation to be in.
You open a second or third credit card and before you know what happened, you find yourself with a bunch of maxed out credit cards and huge monthly repayments.
It can be a very worrying experience, but try not worrying too much. There are a few options open to you that will set you on the right track again and help you begin to reduce your debt.
Minimum Payments Will Not Help You
Firstly you need to understand that making the minimum payment that the card issuer asks for each month will not help you! Minimum payments are designed to keep you in debt with the provider, as they are mostly made up of interest.
So when you make the payment, you'll find that you hardly make any difference to your actual balance! So what can you do?
Well as we mentioned above, if you have more than one credit card carrying a balance, you will be incurring interest charges on each one, so it's time to move all of your balances in to one place. One balance means one interest charge and also one payment to think about making each month.
You will find that many card issuers also offer an interest-free period as an incentive to new customers. This will mean you will not be getting interest charges for up to 18 months, which means any payments you make will be directly reducing your balance.
Do Not Go Wrong Like Others...
Now, back to your original cards. Here's the important bit to remember. This is where many people go wrong, soon to end up back in debt up to their eyeballs!
Do not think that because you're balance is clear and your card is cut up, that your account is closed. Most card issuers will not cancel your cards automatically, instead, they will send replacement cards right back and wait for you to make the next move.
To remove temptation you must asks them to actually cancel your cards fully. Write a brief letter explaining you no longer require the credit card and request the account is closed.
You should also get confirmation of this in the mail after they have closed it down. This may seem like a waste of time, but it will ensure you are not tempted to build up the debt again!
Alternatively, if you're feeling brave you could ask them to cancel all cards issued by them because you will be consolidating your debt on to other cards from a different provider. Credit card companies hate losing good customers so they will surely try and beat the offer you are getting from the new provider.
Add Little Creative Talking
With a little bit of creative talking you could have any annual fees waived and net yourself a nice long interest free period too! Just be certain to close down any cleared accountsfully and you'll start to see the improvement in your outstanding balance almost immediately!
What happens when the interest free period runs out? Simply transfer your balance to another card and do the whole thing over again!