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How to Easily Close a Joint Credit Card AccountApril 23, 2020
It can make sense to open joint credit card account with another individual – perhaps you’ve just gotten married and feel that a joint account can help you manage your expenses better.
Or perhaps you want to help your child build credit by opening a joint account with him or her.
But what happens if for some reason, you want to get out of the arrangement?
Unfortunately, it may not be as easy to close a joint card account as it was to open it.
How to close a joint credit card account?
First off, you need to inform your issuer about your decision to close the account – depending on the card company, you may need to pay off the balance before the account is closed, or you may be allowed to close the account with the balance.
In case of the latter, you’ll still need to pay off the entire amount due and keep making minimum payments until the balance is reduced to zero.
When it comes to paying off the balance, both holders will need to come to an agreement as to who is responsible for paying off how much.
Once this is decided, the joint holders can transfer their shares of the balance to separate balance transfer cards that they’ve opened in their own names.
This would enable them to close off the joint account immediately.
Else, both individuals can stick to the existing account and pay off their agreed share until the balance reduces to zero.
If you choose to keep the account open until the balance is paid down, consider requesting the issuer to disallow further purchases – this would prevent the holders from racking up more debt on the card thereby enabling a faster paydown.
In case you are having difficulty reaching an agreement as to who’s responsible for paying how much (as may be the case with divorces), then it’s best to involve a mediator or the court.
Remember that in case of non-payment, the issuer will hold both holders responsible, and the credit score of both parties will be negatively impacted.
If the other party refuses to make payments, then you should consider paying back the entire amount to protect your score.
After that, you can sue the other party to recover your dues.
Make sure you redeem your reward points before closing the account.
Each holder can claim rights over half the rewards – or you can divide it among yourselves in some other agreed upon proportion.
Convey to your issuer that the account is being closed for good and should not be opened at the request of a single holder.
Once the issuer has accepted your request for closure, you should monitor your credit report until the time it reflects the new “closed” status.
Can closing a joint account hurt your credit?
While opening a joint account, the credit scores of both holders are taken into consideration to determine details like available credit limit, etc.
That is one of the reasons why you cannot simply remove the name of one of the holders from the account – you must, instead, close the account altogether.
An account that you closed in good standing will remain on your report for 10 years, though the negative details associated with the account will fall off after 7 years.
Unless you’ve had the account for a very long period of time, the average age of your credit accounts (a determinant of your credit score) won’t be affected much.
Even if there’s an impact, it won’t be immediate – in other words, your credit score is not likely to fluctuate much because of this element.
However, when you close a joint account, depending on the amount of debt you are carrying on other cards and your total available credit limit, your credit utilization ratio can increase.
When this proportion rises above 30%, it may impact your credit score negatively.
However, as you continue to make timely payments and open other accounts, your score will likely come back to previous levels.
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