Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Opening Credits,” a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
Dear Opening Credits,
When do credit cards get cut up? — James
I love the brevity of your question! There are so many rules surrounding wise credit use that remembering them all can be like trying to recite the names of people you just met at a cocktail party. Here, then, are my top six easy-to-recall reasons to slice and dice a credit card.
- You suspect identity theft. The moment you believe that someone else has accessed your credit account, get on the phone with your credit issuer and explain what happened. When you speak with the customer service representative (or “loss and theft” staff specialist, if there is one), you may be instructed to destroy the existing card and wait for a new one to be issued. Thieves can make purchases and wreak havoc quickly, so also file a report with the police department and contact all three credit bureaus to flag your files.
- A soon-to-be-ex has access to it. Are you and your spouse splitting, but you have individual or joint credit accounts? This could be a problem. If he or she decides to take the cards on a shopping spree, you could be held responsible for at least half of the charges. This is especially important for couples in community property states, as both members of a marriage generally have equal rights to assets as well as liabilities. Therefore, if you suspect that the other person may go charging wild before the divorce or legal separation, confiscate and chop the cards, call your creditors to close or suspend use of the accounts.
- You can’t stop overcharging. If credit card debt is burning a hole in your bank account, and you truly can’t control your charging habits, you may have an addiction issue to contend with. Not everyone has the ability to charge only what they can afford to repay. If this is the case, seriously consider calling Debtors Anonymous, and purge the temptation from your hands and pocketbook. When you can’t keep your balances under control, cutting up the cards and bowing out of the entire system may make sense.
- You have more cards than you need or can manage. Those “15 percent off today’s purchases when you open a line of credit” offers can be enticing, but over time, you may have picked up a few too many cards. While maintaining accounts that you’ve had for many years and have a long and positive history with will help your credit rating, you may want to cull newer, unnecessary accounts. All that available credit can lead to high debt, and if you lose them, it can be be mighty difficult to remember which cards you had with you — making reporting the loss a dangerous hardship.
- The creditor is not to your liking. Sometimes a relationship just doesn’t work out. You and the credit issuer may have been a bad match. Perhaps you were never fond of their policies, or you found their customer service or rewards programs lacking. Whatever the case, you are always free to say goodbye. Before doing so, however, let them know why you are dissatisfied. If you’ve been a good customer by always paying on time and keeping the balances low, they may do what it takes to make you happy. The advantage? You don’t have to start fresh with a new company.
- Your replacement card has arrived. Perhaps your credit issuer has reissued you a new card because the old numbers were compromised, or the bank no longer offers the same type of account you have and is switching you to another. What do you do with the one still in your wallet or handbag? Shred it. Creative thieves have a way of extracting key information from the numbers and information printed on even defunct cards. It’s always best to lessen the possibility of having them fall into the wrong hands.
So James, this should provide you with a pretty good guide of when to begin card trimming. If another circumstance comes up that leaves you guessing, don’t be afraid to contact your creditor and ask them as well. There’s no reason to go scissor-mad if you don’t have to.
See related:Credit Card Help: 10 things you must know about identity theft, How to cancel a credit card, Divorce and debt, When hit with APR hike, do you keep the card or cancel?, Good credit history doesn’t go away when card canceled, Consider these factors when choosing to close a credit card, 7 times when it’s OK to cancel a credit card, Credit card addiction: How to break the spending cycle
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