Video: 4 times you should close a card
If you’re ready to shed some plastic, but not sure if it’s a good idea, here are four times you should consider closing a card, even if it means dinging your credit score.
1. If you can’t control your spending, get rid of the card.
Bills you can’t pay will hurt your credit score the most and affect your peace of mind. If you can’t control yourself with cards, it’s time to get rid of the temptation. Even better than closing the card and dinging your score is cutting it up so you can’t use it. Just make sure you don’t order a replacement in a moment of weakness.
2. If you have a high annual fee you can’t afford, consider closing it or switching to a no-annual-fee card.
Just make sure you use those reward points first, since you won’t get to keep them.
3. If you’re getting a divorce, you need to close all joint accounts.
Make sure you pay off the balance first though, otherwise you’ll both be responsible for the remaining debt, no matter who agreed to pay it off and what it says in the divorce decree.
4. If you need to simplify your finances, then thin out your cards.
Only have what you can keep track up and remember paying your bills on time affects your credit score the most, so make a plan that works for you.
If you do plan on closing a card, make sure you won’t be seeking a loan for any major purchase within the next six months as you could incur a higher interest rate. Also, try to avoid closing your oldest card as that figures in your length of credit history – a minor, but still important component of your credit score.
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