There are Times to Close a Credit Card Account

There is no denying the fact that closing a credit card account can have a negative impact on your credit score. For example, closing an older account can shorten your credit history. It will also mean that you have less credit available, thus leading to a higher credit utilization ratio.

Even with all this in mind, there are times when it makes sense to close a credit card account. Here are some of those times:

1. If You Can’t Trust Yourself

Do you continue to run up a large credit card bill, just to find that you can’t pay it off in full each month? If you are unable to curb your spending, you need to close your credit card account. This is the best way to safeguard against future trouble.

2. To Prevent Identity Theft

Do you have a credit card that you don’t use very often? It is these types of cards that are often at the highest risk of identity theft.

If you have concerns regarding identity theft, it may be best to close a credit card account for good. It’s better to be safe than sorry.

3. High Fees, High Interest Rate

A credit card that costs you money is one that you don’t want to hang onto. This includes those with high fees and/or interest rates.

For instance, some credit cards have an annual fee attached to them. This means you have to pay the fee once per year for the right to use the card. There are times when this is okay. There are also times when this is a waste of money.

Tip: before you close a credit card account due to high fees or a high interest rate, first attempt to negotiate with your company.

4. Too Many Cards

How many credit cards do you have? If you don’t know the answer, you probably have too many.

Only you can decide how many credit cards is too many, but this is something you need to look into sooner rather than later. It may be time to close an account if you have too many to handle.

5. No Major Purchases in Your Future

If you don’t have any major purchases staring you in the face, such as a car or home, you should feel more comfortable closing a credit account. Conversely, if you plan on making a sizable purchase in the near future, it makes sense to hold off for the time being. Now is not the time to do something that could potentially impact your credit. 

These are just a few of the times when it makes sense to close a consumer credit card account. Can you think of any others?