When you first see a credit card advertisement, it appears to be a great deal. Its a prestigious card offering valuable rewards points. You like the idea of using the new card to pay for all of your monthly expenses, accruing points, and using your bank account to pay it off at the end of each month. You apply for the card before reading the small print. You decide it’s not the card for you only after finding out more about the terms and conditions and annual fee. Here’s what comes next and how you can take advantage of the circumstances.
If You Apply for a Credit Card, Do You Have To Accept It?
Your credit card application is either approved or denied when you submit it. Your credit card account usually becomes active right away after it is approved. The credit card is the offer, and your application is regarded as an acceptance of that, so there isn’t an offer made after you apply.
After you apply, it’s extremely unlikely that a credit card issuer will contact you again to decide whether to approve or deny the card. Rather, your account will be activated upon approval; if you are preapproved, this may occur hours or even minutes after submitting your application.
This implies that you will not be able to reject the card once you apply unless you are able to cancel the application while it is still pending. It does not mean that you have to keep the card or use it. You will then need to close the account and cancel the credit card if you are accepted.
How To Cancel a Pending Credit Card Application
The issuer’s customer service must be contacted to inquire about the possibility of changing or canceling your credit card application, as this is the only practical way to end the application process. This might not be achievable depending on the status of your application or the identity of your issuer.
However, this can be a simple method of canceling a credit card if your application hasn’t been processed yet.
Issuers may occasionally be unable to cancel your application or account, but they may be able to assist you in switching to a different card or downgrading to one with better terms, such as a cheaper annual fee.
You must get in touch by phone or email with your bank or the card issuer’s customer service to cancel a pending application. Before you call, you can frequently check the status of your application by logging into your credit account or online banking.
Regretfully, you are unable to cancel your application if it is approved (preapproval allows this to occur minutes after the application is submitted). Your only choice is to either keep the credit card or cancel it and close the account.
What Are the Risks of Canceling a Credit Card You Got Approved For?
The only way to terminate your account if your application is accepted and it is opened before you have a chance to get in touch with the card issuer is to cancel the account as you would any other credit card.
However, it’s crucial to weigh the benefits and drawbacks of canceling the card because doing so too soon could have a negative effect on your credit report and score. It might make more sense to keep your new credit card open if it has fantastic benefits like no annual fee or a low interest rate.
One of the main ways to raise your credit score is to reduce your credit utilization rate, which can be done by getting a new credit card and increasing your credit limits. By diversifying your credit mix, having multiple credit cards can also help you get a better score.
Conversely, if you open a new card and close it right away, you run the risk of increasing your utilization and harming your score’s new credit component. Additionally, you will no longer be able to use any of the card’s perks or benefits, and getting approved might become more difficult going forward.
Cancelling a newly applied credit card is only really advantageous if you know that there are more risks associated with it than benefits, such as high annual fees and interest rates, or if you have a history of reckless spending and don’t want to tempt fate with a new credit line. It might be wiser to speak with your card issuer about downgrading to a different card with better terms or lowering your credit line rather than canceling your current card.
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How To Cancel a Credit Card You Got Approved For
If you truly are determined to cancel, the procedure is the same as canceling any other credit card.
To close the account, you must speak with your issuer over the phone or in person at a bank. It’s unlikely that you’ll have a balance if the account was just opened, but depending on the card’s terms and conditions, you might still be required to pay the annual fee (though many banks will waive this if you close the account within a reasonable amount of time).
Since most credit cards have terms that prohibit you from simply using cash or points and then canceling the card, it is unlikely that you will be able to redeem any rewards. You can request that your issuer close the account and give you written confirmation that it has been closed once you have completed all the necessary steps and verified whether there are any fees or amounts owed.
After a month or so, you ought to be able to verify through your credit report whether the card has truly been closed and whether it has had any effect on your credit score.
Can Canceling a New Credit Card Affect Your Credit Score?
The primary disadvantage of canceling a new card is that it may negatively impact your credit score and history, even though it can be inconvenient and time-consuming.
Your credit card issuer will frequently perform a hard credit check on you when you apply for a new card, which can lower your FICO score. This won’t necessarily be a problem if you keep the credit card and use it wisely to raise your score, but if you immediately cancel it, you’ve effectively decreased your score without doing anything.
If you have a short credit history, opening and promptly closing a credit card can also negatively affect your score and affect your ability to get loans in the future. Each new inquiry for a line of credit is recorded on your record, even though hard inquiries only have a minor impact on scores.
Lenders typically view it as a red flag if their records show that you are opening and closing new credit lines frequently because this could be an indication of poor money management or credit churning, which is the practice of opening and closing accounts primarily to take advantage of welcome offers and points.
Of course, the few points you’ll lose by opening and closing a new account aren’t worth the risk if you’re considering canceling because you know having a large line of credit is dangerous for you or because you can’t afford the annual fee. Debt or late payments have a greater negative impact on a credit score than a hard credit check, so you should consider the risks and your own situation before cancelling a credit card.
What Can I Do If I Don’t Want To Cancel A New Credit Card?
There are a few options available to you if you decide to change your mind about a card that you have been approved for but don’t want to cancel and run the risk of having your credit score dropped.
The first is to keep the card and use it sensibly to raise your credit limit, decrease your utilization rate, and enhance your credit history in order to raise your credit score. If you are worried about going over budget, you can get in touch with your issuer and request that the credit limit be reduced.
The alternative is to get in touch with your issuer to see if you can be moved to a different credit card with better terms, such as a lower interest rate or more benefits, or downgraded from your current one. Your issuer will probably give you better terms if you’ve already been approved for one credit card because it will benefit them more if you transfer your account rather than cancel it.
While canceling a credit card as soon as you apply isn’t disastrous, you shouldn’t do it frequently. Once or twice is okay, but too many account openings or cancellations will raise red flags with lenders and eventually result in your credit score being lowered. When looking for a new credit card, the best course of action is to simply read the terms and conditions thoroughly and apply for cards that you are certain you want to keep for the long haul.
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Copywriter and marketing consultant Elle Juliette specializes in travel, business, and finance. After starting her own company in 2021, she has collaborated with organizations such as Drawbridge Growth, AGM, and Linktree. When not writing, her interests include travel, cuisine, and photography. lorem Is it really your intention to put your decisions on hold? The Forbes Advisor editorial staff is impartial and independent. We receive compensation from the businesses that advertise on the Forbes Advisor website in order to support our reporting efforts and keep this content available to readers for free. This compensation comes from two main sources.
FAQ
Can I decline a credit card offer after applying?
Regretfully, you are unable to cancel your application if it is approved (preapproval allows this to occur minutes after the application is submitted); your only choices are to either keep the credit card or cancel it and close the account.
Can I cancel a credit card that I just opened?
The bottom line. You have the option to cancel your credit card account if you change your mind after applying for and receiving approval from the issuer. Think a bit about the consequences before you cancel. Get a written confirmation of the account closure if you do decide to cancel.
Does Cancelling a credit card application affect credit score?
Key takeaways: It can be challenging to cancel an application in time because some credit card issuers review online applications in a matter of minutes or seconds. Canceling an application won’t affect your credit scores. But the majority of credit card applications call for a hard credit inquiry, which can lower your credit scores.
Can I cancel a credit card application that is pending?
In the event that the application is still pending, cancellation may be possible. Make sure you ask the person you are speaking with if they have received a notification regarding the application being canceled. This might come in the form of an email or text message, depending on the sender.
Read More :
https://www.forbes.com/advisor/credit-cards/cancel-credit-card-i-applied-for/
https://www.fool.com/the-ascent/credit-cards/articles/what-happens-if-i-change-my-mind-after-applying-for-a-credit-card/