What Should I Do With a Credit Card I Never Use?

The Smart Way to Close an Old Account

There is a right way and a wrong way to close an account you don’t want anymore. The right way is to get your free credit report from at least one of the major credit reporting agencies so you can see what is being reported.

More from Credit.com: How to Get Your Free Annual Credit Report

More from Credit.com: Tips for Improving Your Credit: Your Amount of Debt

Then take a look at your “debt usage” ratio; in other words, how do your reported balances compare to your available credit limits? (You can check your credit scores and get an analysis of your debt usage for free from Credit.com.)

Next, subtract the credit limit on the account you want to close from your total credit limits. How will that change your debt usage ratio? If closing this account means that figure will jump significantly, you may want to consider either asking for a credit line increase from the cards you are keeping, or hold off on closing the account. Generally, keeping your balances below 10 percent of your available credit is the safest bet, though most people will still have a good score if they keep them at 25 percent or less.

If you decide to close it, make sure you follow up to ensure it’s actually been closed. You should get a letter or statement from the issuer confirming it’s been closed. If you don’t, contact your card issuer and request it. Keep that documentation indefinitely in case it pops up again later.

This article originally appeared in Credit.com.

Any opinions expressed in this column are solely those of the author.

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