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Bankrate has some advice on how to cancel a credit card. Closing unused cards can prevent temptation to use them, reduce paperwork, and reduce the risk of identity theft.

Do not cancel a card unless it has a zero balance, and don’t let your credit card company know you’re planning to close the account. Some issuers will raise interest rates if you try to cancel while you still have a balance. Also, if you intend to purchase a house or car soon, you may want to wait to cancel your cards.

To cancel, call the credit card company. Some will let you cancel without hassle, but most will attempt to sweet-talk you into staying longer. They’ll make offers of better interest rates, no annual fees, and maybe even some perks. Don’t let these sway you. If you intend to keep one or more cards, and if the offered upgrades make the card you’re trying to cancel better than one you plan to keep, you may want to cancel another card instead. But remember: that other credit card company may sweet talk you, too.

Write down the name of the person you talked to and what time you talked with them.

Canceling your credit cards can hurt your credit score in a couple of ways.

Credit-scoring models look at a number of factors when calculating your score, including the result of the following formula: The total amount of debt on credit cards and revolving accounts divided by the total amount of debt available on those accounts. This formula results in a fraction less than one. The lower the fraction the better. A score of one would mean your outstanding debt equals your available credit and you’ve maxed out your cards.

If you reduce your available credit significantly, your percentage of used credit increases, affecting your credit score. Also, if you close all of your credit card accounts, your credit score will suffer a little. For more information, read the entire article at Bankrate.

(See also: boing boing.)