“Ok Steve, let’s rock.
If I cut my credit card up and mail it back to the bank, thus canceling the account, do I have to pay off the card’s outstanding amount in one lump sum, or can I continue making monthly payments?
You will not need to make one lump-sum payment but cutting it up and closing the account is not the smartest move to make.
If you have any rewards or perks owed to you by the card, when you close the card, those will be lost. And some creditors actually raise your interest rate to the maximum allowed after you close it and that will just make getting out of debt more difficult.
You are better off holding on to the card and paying the balance off with monthly payments. Once the card is paid off, then you can cut it up and send it back. But even that might not be the smartest thing to do.
If you don’t have any other cards or this credit card is the one you’ve had the longest you should think twice before closing it. The card is is actually doing more to improve your credit and increase your by keeping it open. So, if it is the only or the oldest, pay the card off but don’t rush to close it.