How many credit cards do you have?

Do you need all of them?

Many consumers carry several credit cards with them on a daily basis, but use only a few over any given period of time. For many people, two or three credit cards are all that is truly needed. The rest of them can be cancelled, and probably should be cancelled.

One of the very best reasons for canceling some of those cards is that it reduces your temptation to use them. After all, you cannot put additional credit on something that you do not have. However, before you begin chopping up those unused credit cards, consider the following.

Make sure that the credit card you are going to cancel is an empty account. This means that the balance on the card is zero. If you owe anything on the account, even a few dollars, make sure that you pay it off completely before you cancel the card.

Silence is golden. If you are planning to cancel a card, keep it to yourself. In other words, do not tell the credit card company that you are planning to leave. This applies when you have a balance on the account but are planning to pay it off and then leave. It does not always happen, but some companies may increase your interest rate on that balance if they think you are leaving soon.

Timing is important. If you are planning to apply for a big loan in the near future such as a home loan or car loan you may want to hold onto your old cards (don't use them, just hold on to them). In some cases, canceling a credit card can hurt your credit score which is used during the home, car, boat etc. loan process. If the balance on the old card is zero, then simply keep it put away until after the future transaction has taken place. Once the transaction is finalized, you can cancel the card.

When it is time to actually cancel the credit card your first step should be to contact the creditor. In some cases, you can cancel an account via phone. In other cases, you need to do it by mail.

If you cancel by phone and you have been a good customer do not be surprised if you end up talking to someone who will try to convince you to keep the account open. In some cases, they may offer you some incentives for staying with them. This might include a lower rate, better promotional deals (air miles or phone minutes for example) or any other benefit that they feel you might enjoy. If the new rate, for example, is lower than some other card that you have, you may want to reconsider your cancellation. If the new incentives do not make a substantial difference, go ahead and cancel.

You should also ask that the credit card company tell the credit reporting agencies that the account was closed at your request. Make a note of the time you called, the day you called, and the name of the person you talked to on the phone. You should get, via mail, a confirmation letter that your account was closed.

Follow these steps and canceling your old credit cards will be painless and safe. You will be happy that you did this work later on when you have fewer bills each month.