Here's a mistake we hear about from time to time: Joe decides to take our advice and reduce the number of credit cards he has in his wallet. So he goes and cuts up a few of his cards and tosses them in the trash.

Good for him, right? Well, yes.

But Joe needs to take one more step.

Here's the problem: Cutting up your credit cards doesn't close the accounts–you actually have to let the credit bureaus know that you've closed the accounts. And if the accounts aren't closed, you may hurt your chances of getting credit in the future because it will appear that you've got open credit lines from those old cards.

Dolan Smart Money Move: To close a credit card account, simply send a letter with your name, address and account number to the credit card company, asking them to close the account. The point is to show credit rating agencies that you are canceling and not being canceled by the card company because you're a deadbeat.

We want to make this as easy as possible so we've written one for you. To make your point clear, use our form letter below to write to the company:

Credit Card Cancellation Letter

[Your name]
[Your address]
[Date]

Dear Sir or Madam:

Please let this letter serve as notice that I am terminating my credit card account effective immediately. Please close the following account:

Credit Card Company: ____________
Account Number: ________________

Please send me written confirmation that my account has been closed. Also, please confirm that you have notified all appropriate credit card bureaus that this account was closed at my request.

Thank you for your prompt attention to this matter.

Sincerely,
[Your Signature]

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