Yes – I know – I am writing a lot about lines of credit, but it seems that my readers are enjoying my posts about it. In today’s post, I am going to discuss how to cancel a line of credit.

The easiest way to cancel your line of credit is to simply call your bank or just walk in to any branch and ask them to cancel it. That’s it. The bank should cancel the line of credit for you within a couple of days, and it should be removed from your account then.

But, what if you still owe money on your line of credit?

Well, you need to pay out that money before canceling your line of credit. Another option would be to lower your credit limit on your line of credit (the bank will agree to that immediately).

Will canceling your line of credit affect your credit rating?

Definitely! But, in this case, it’ll improve it. It’s because technically you will have less potential debt in the eyes of the potential debtor. In fact, nearly all banks will ask you to cancel your line of credit if you have any before getting a home mortgage.

Will it be easy to get back the line of credit once its canceled?

Unless your economic conditions change for the worse or your debt level has substantially increased, then it should be easy to get back your line of credit. Note that some banks will leave the line of credit open (from their end, often without the knowledge of the client) for 6 months after cancellation in case the client wants to revive it, so, when the client calls to get back his line of credit, they’ll do it immediately. Some banks even inform the client in writing a few weeks after his account cancellation that he can immediately revive his line of credit anytime within 6 months after its cancellation by simply calling them.

Is it a wise move to cancel a line of credit?

I personally don’t think so. The line of credit is an excellent safety net and usually provides a competitive interest rate unlike the loan shark interest rate of a credit card. Unless you want to cancel the line of credit because you have to (such as to improve your credit or because the bank told you to) then I suggest you keep it. It’s excellent for those gloomy days.

To conclude, cancelling a line of credit is easy and feasible – but, before doing that, don’t ask yourself: “Do I really need this line of credit” but rather ask “Do I really need to cancel this line of credit?”. If the answer to the latter is yes, then go ahead, cancel it – otherwise you should keep it. You never know when you’re going to need it.

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