Should You Cancel Unused Credit Cards or Keep Them?
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Why You Might Want to Cancel an Unused Credit Card
It’s a secured card. If you no longer need a secured card to build or rebuild your credit, you may want to cancel and get your deposit back or, perhaps, ask the issuer about transitioning to an unsecured card. There are a number of fair credit score cards out there to choose from. It’s a store card, and you no longer shop at that retailer. Maybe you got the card back in the day when you were into a particular label, but now it’s a no. Or maybe you loved a store’s baby clothes, but your kids moved up in size and you moved on. If the card has a low limit, as many retail cards do, canceling probably will have a low impact on your credit score. The benefits don’t justify the fees. If you’re paying a high annual fee for a card that doesn’t offer rewards you need or use, canceling could be an option worth considering. Or you might choose to ask the issuer if you can switch to a different card with perks that are a better fit. It’s a high-interest card you just can’t quit. You paid down the balance, took it out of your wallet and buried it in the back of your sock drawer — and yet you still hear that high-interest card calling your name every time you think about taking a trip or want to buy something online. If you’re worried about getting buried in debt all over again because you lack the discipline to keep saying no, it may be time to negotiate a better interest rate or break up altogether. You’re separated or divorced. It’s important to be clear about credit card debt when you’re splitting with a spouse. Experts generally advise getting a card in your own name first, then closing all joint accounts. That way, you won’t have to worry about your ex running up bills that you’re still responsible for. You suspect credit card fraud. If you spot something questionable on your credit card statement, it’s a good idea to report it to the credit card company right away. If it’s fraud, you and/or the issuer may decide the account should be closed.
Does Canceling a Credit Card Hurt Your Credit?
It Could Increase Credit Utilization
It Could Impact the Length of Your Credit History
It Might Decrease Your Credit Mix
Alternatives to Closing a Credit Card
Keep the Card, Lower the Cost
Keep the Credit, Ditch the Card
Change the Card, Improve the Perks
Keep the Card, Manage the Aggravation
When It Makes Sense to Keep an Unused Credit Card
How to Safely Cancel a Credit Card
Check Your Rewards Balance
Minimize Other Credit Card Balances
Contact the Credit Card Issuer
Follow Up in Writing
Destroy the Card
Keep an Eye on Account Statements
Monitor Credit Reports
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