Thank you - I ended up in a chat with QBO help agent, and we had issues following the steps you mentioned, we had the additional steps of having to move open projects/transactions to the new customer 1, then merge and remove the 1.

In case anyone else has this problem, you can't merge if the customer with wrong CC info has a "sub-customer" which in our case was the projects. Those have to be re-assigned to the new customer, then refresh your screen (or sign-out, sign back in) then try merging again.