Should I Cancel a Credit Card That is Paid-Off?

You’ve finally paid off that credit card. It’s sitting there with no balance on it and you regret ever owning it. It’s got a high interest rate and no rewards program and you will never use it again.

But should you close it? This is an interesting debate that often comes up in personal finance circles. I think there are benefits and drawbacks no matter which you choose and the “best” answer isn’t absolute in all cases.

So let’s dig in.

If you keep the card…
If you decide to keep the card, there are a few things you should think about.

First, simply having the card is a small identity theft risk. If you’re no longer actively using the card, the risk is pretty small, and you can make the risk even smaller by taking action.

Second, if you don’t cancel the credit card it opens the door to spending temptation. Obviously, if you have the strength of character to pay off all of that debt, you’re able to keep the temptation in check.

There are two big steps you can take to reduce the two risks above even more, chopping them down to an incredibly tiny sliver.

For one, destroy the physical card. Cut it up so that there’s no risk of losing it or having it stolen. I tend to actually melt used credit cards over an open fire (seriously – I’ll toss them into campfires).

For another, remove your credit card information from any online retailers that may still have it. Check your Amazon account or any other retailers you might use and make sure your zero balance card isn’t listed there. Just get the information completely out of the system.

If you cancel the card…
Let’s say you decide to cancel the credit card. What are the drawbacks of canceling it?

The big one is that canceling a credit card results in a negative bump on your credit score. This negative bump goes away after roughly a year, but during that year, your lower credit score can have some short-term negative implications. It can cause your insurance rates to go up. It can reduce your chances for getting work.

The big one, though, is that it can also hurt you if you’re attempting to get a mortgage. A lower credit rating right at the time when you’re attempting to secure a home mortgage is not a good choice.

So what should I do?
From my perspective, the answer is simple. Before you do anything, ask yourself if you’re going to be changing jobs or getting a mortgage or a car loan in the next year.

If you’re looking forward to a major move like this in the short term, don’t cancel the card. The risk of the short term drop in your credit rating is higher than the risk of just cutting up the card and forgetting about it.

Instead, cut up the card, but hold onto the account until you’re past that hump that you’re facing in the short term. When you’ve made it, then make the call and cancel that credit card.

On the other hand, if you don’t see a major move in your future, cancel that card. Doing so eliminates the temptation and eliminates the (small) chance of identity theft.

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  1. Amit says:

    Hey Trent,
    What a coincidence, i just canceled my credit card (on friday) and you wont believe i was searching on your site about anything that mentions about credit card cancellation :)))

    Actually here in India, the credit rating is not a big issue, since though it might make a difference for getting futher loans, it does not give advantage of any discounts on any insurance premiums etc…and i do not have to take any loan in neat future now

  2. Sara says:

    Interesting. I’ve always heard the advice “close” or “don’t close” but never the rationale behind it. Thanks!

  3. Spaceknarf says:

    The US credit rating system is such a strange system. In the Netherlands, actually *having* a credit card might hurt your credit score, because your debt level is higher. When the credit card is closed, it is no longer an issue for lenders, unless you have been late on your payments on that card.

  4. Johanna says:

    I think it’s more complicated than this. It’s my understanding (somebody correct me if I’m wrong) that the effect on your credit score of canceling a card is twofold. First, there’s the length of your credit history – if you cancel your oldest card, you make it look like your credit history is shorter, which is bad. And second, there is the ratio of credit used to credit available – if you cancel a card with a high limit, you make that ratio go way up, which is also bad. Neither of these is quite as simple as a “negative bump” that “goes away after roughly a year.”

    If the paid-off card is your oldest card, then I say keep it – unless your second-oldest card is almost as old and you’re planning on hanging on to that one. And if the sum of your balances on your other cards is more than 30% of the sum of their limits, then it’s also worth keeping the paid-off card, to keep that ratio as low as possible.

  5. Bev says:

    Seems crazy to me too, paying off a debt makes you a worse risk? – the world is mad.

  6. Diane says:

    Just curious – How does it affect your score if the credit card company closes your (inactive and/or no balance)account? I’ve had two letters lately from cards I no longer use. Should I fight to get them back or let them go? I don’t need the credit at this time, I just want to protect my credit score.

  7. Chris G. says:

    I much rather risk my credit score being a tad lower than having an unused card. I see no point in keeping an open account that could result in identity theft or any temptation to spend money thanks to having extra plastic on hand.

    I’ve been down to one open credit card for about a year and it is one of the best decisions I have ever made.

  8. Tyler says:

    Closing an account will put a slight, temporary ding in your credit score, but the lowered amount of AVAILABLE credit you have by closing an account can hurt your score in the long-term if it significantly raises your credit utilization ratio (the amount of credit you have available to you versus the amount of credit you actually use).

    There are a lot of really strange things about how Fair Issac computes credit scores. I can’t say that I really understand the negative ding you get just for closing an account.

  9. Marsha says:

    I agree that “there are a lot of really strange things about how Fair Isaac computes credit scores.” In the documentary “Maxed Out,” it says that the actual formulas are secret – they could be doing ANYthing. In fact, a friend of mine has a lower FICO score than her husband, and they have exactly the same credit history.

    I predict [hope] that the current economy will bring some changes to FICO score calculations – and possibly some legislation about requiring them to be open and honest about what they are doing.

  10. Dr. Faith says:

    I would prefer to not cut up the card and put it somewhere that I won’t use it (some people use the freezer method) or perhaps in a safety deposit box or even in a relative that you trust’s house in a random location there that you don’t know about.

    Call me crazy, (and maybe I am or maybe it is because I don’t have that large of an emergency fund yet) but I want to know if I NEED the credit (and I mean ABSOLUTELY, POSITIVELY NEED it) that I can use the credit that I have.

    Of course, making there be extra hoops that you have to climb through reduces the likelihood that you’ll use it for unnecessary purchases (though of course does not completely eliminate it).

  11. Bev said: “Seems crazy to me too, paying off a debt makes you a worse risk? – the world is mad.”

    Bev, it’s not the paying off of the debt that hurts your score, it’s the closing of the card. If you paid off your debt and kept the account open, it would most likely improve your score – in some cases, it would improve it by a lot. But closing the account hurts you because your total amount of available credit is lowered. It can also hurt you if it’s your oldest card, because it might truncate the length of your credit history, which is another factor that plays into your credit score.

    Having an empty card isn’t a temptation to me, even though I’ve been in credit card debt before (I’ve been CC debt free for one year now!). It really depends on the circumstances that got you into debt in the first place. In my case, I was trying to pay for a college education that was out of my price range, and the charges on my card represented me trying to feed myself (mostly pasta and ramen) and make ends meet. When I corrected that problem (sadly, by dropping out), I was able to start making headway on my credit card debt. So if you can get a real handle on why you get into debt, you can figure out what it will take to eliminate temptation for you.

    Oh, and Trent? I hope you and your kids aren’t anywhere near that campfire when you burn plastic in it. The fumes from burning plastic can build up in a person’s throat and close up their airway – especially in a small child. You probably already knew that, but I know not everyone grew up around woodstoves and campfires like you and I, so I wanted to be sure to note it for your readers! ;)

  12. Marc says:

    Tyler hit a going point in that the main reason closing an unused credit card can be bad is it mainly hurts the portion of your score relating to utilization of credit.

    Example:
    You have 2 credit cards, each $10,000, your total available credit is $20,000. You have a $6000 balance on each, so your utilization is 12000/20000=60%.
    You pay off one fully, so you have a $6000 balance on $20000 credit, meaning now your utilization is only 30% – however if you close the unused and paid off $10k card, utilization is back up to 60%.

    Utilization is relevant to credit scores because it’s a good indication of how extended (over-extended?) someone is. However, the credit score system does not do a good job of reflecting this kind of scenario. Credit scores generally assume variables like utilization are roughly constant, so if it goes up suddenly it “assumes” that’s the new normal for you.

    If your score is fairly high, the effect will be relatively minimal. Also, it depends on how many other available credit facilities you have – if you have $100,000 available closing a $2000 card will have a minimal effect.

    Not all hope is lost if you shop for a mortgage or loan, if you go to a lender that will actually evaluate your creditworthiness on more than just a FICO score (ie credit unions, some generally smaller banks) they will better consider the fact that your higher utilization ratio is actually due to lower total available credit (*usually* a better thing).

  13. Credit says:

    This is incorrect:

    “This negative bump goes away after roughly a year”

    The negative bump can have an impact for the rest of your life — especially if this was one of your older accounts. It will both increase future utilization and provide less data to the FICO risk model (this is more important than average or total age). Cutting up the credit card will cause it to be canceled by the credit card company for inactivity after about 6 months or more depending on the company. However, if you are going to be irresponsible and spend money you don’t have, you should cancel the card immediately and seek counseling for an addiction to fix the underlying problem before you start to rebuild your credit score.

  14. guinness416 says:

    If you keep a card shouldn’t you be putting some minimal charges on it monthly, as a sort of personal fraud alert and to keep them from dining you with non-usage charges (or just closing it themselves, as I have had done to me). That’s what Ramit’s book indicates anyway, and is always what I have done with a recurring monthly charge such as a charitable donation.

  15. Desi says:

    Sorry…If a company won’t hire you b/c you don’t have credit cards, they are looking for a sad person drowning in debt to work as a slave for them. Go somewhere else and don’t look back. Of course if you work in banking, this is different.

    My credit score is crappy b/c I closed EVERYTHING and have no debt except for my husband’s mortgage. I was able to get a great job and so was my husband.

    Also, my husband had no debt and an awful credit score so we just had our mortgage application reviewed by a person. Not a biggie.

  16. Shevy says:

    Back a dozen years ago or so, when I applied for my mortgage, it was a condition of mortgage approval that I lower the credit limit on one of my credit cards. That put me back into the ratio they needed (including the mortgage debt). But it might have been a problem if I’d lowered it myself ahead of time.

    If you’re turned down for a mortgage because your ratio isn’t within their limits, you might try asking if they’ll approve you if you lower your limit or close your unused card. Once you have that agreement in writing, you can close away.

    I think it’s kind of silly, but play the game and win by their dumb rules.

  17. richtheblogger says:

    Hi Trent, nice article. I currently work for a major credit card company and personally I think it depends on just how many credit cards you actually have? I would personally always keep at least one credit card open. Use it for small amounts every month and pay it off in full each and every month. This way you keep your credit rating high and it shows to potential lenders that you are sensible and can manage credit effectively.

  18. KC says:

    I’m not sure how much these factor effect your credit rating in the long term. My husband and I have a number of “open” credit cards – probably $30k worth of credit. But at any given time our credit report might show we were using $3k (At most) of our consumer credit – that was usually the most we’d charge in a month and then pay it off.

    We applied for a mortgage in 2000, refinanced in 05, and used credit cards monthly – never carrying over a balance. We sort of forgot about our credit rating – cause we never took out another loan. In Dec 08 we bought a house – we had no idea what our credit score was til the banker told us – both our scores were over 800.

    So basically we had A LOT of untapped credit. But for many years we just did what you are supposed to…pay our bills on time (mortgage and cc, we didn’t always pay off the cc in full each month either, but any payment was on time). So the other factors of the credit score didn’t matter – a long history of paying on time was all that really seemed to count.

  19. marie says:

    This is timely advice for me. I have 5 cards; 3 of which (the non-rewards ones)have had a zero balance for a while. I would rather use one of my two other cards (one Visa and one Mastercard – to keep my options open as some places only accept one or the other). I have been considering cancelling the 3 cards, however, one of them was my first card so I’m not sure if cancelling your first card is a good idea. I will cancel the other two for sure though.

  20. Aaron says:

    As soon as my bank started issuing debit cards through MasterCard I closed my credit card account with a balance that I paid off a couple months later. I couldn’t care less what that did to my credit rating, since I have no reason to borrow money or finance a purchase.

    The only reason I can see for keeping your card is if your bank doesn’t issue its debit cards through MasterCard or Visa or give you easy access to an additional checking account for debit card use. I’m not sure yet how the debit card will work for flight reservations and rental cars. It shouldn’t be any different than a normal credit card transation. If not, that’s reason number two.

  21. Tara Bartee says:

    I got an odd bit of information the last time I checked my scores, One was 794, the others over 800. The “problem” with the 794 seemed to be that I wasn’t using my cards enough!!

    I have several monthly expenses billed to my credit cards, but had moved them all to one card so I only had one bill to pay. I’ll just take the other two and use for groceries or gas so they all show some utilization. Of course always pay off every month. I HATE paying interest.

    I also monitor the balances weekly. I’m retired now so I have the time. I get credit reports and fico scores quarterly, I get one free set and pay for the others, Cheap insurance for peace of mind.

  22. Baker @ ManVsDebt says:

    @credit

    This is incorrect, as well:

    “The negative bump can have an impact for the rest of your life”

    Obviously you must know this isn’t the case. It’s true that it’s hard to say “1 year”, but Trent’s generalization is much, much closer to the truth than the “rest of your life”. C’mon.

    It should also be noted that there are several other smaller benefits that may push you over the edge if you are thinking about closing your accounts:

    1) Simplifies your financial accounts. This is a positive thing for several reasons. It makes it easy to grasp your financial life. It makes it easier to check a credit report for errors (that likely damage your score more).

    2) Prevents unexpected and/or erroneous fees. This can include Change of Service announcements. Stories abound of people getting misc fees on old cards and accounts. Even if you ultimately won’t be liable for the error, it does take time, energy, stress to effectively clean it up. This is in addition to the small identity theft risk. Also, it’s better to cancel the card on your terms than have the c.c. company cancel it down the road (and possibly at a worse time for you).

    3) Uses less paper for paper statements or time/energy for e-statements. For all your green folks, it certainly uses more resources if everyone kept every unused card open. While the small ding in your credit might not justify the miniscule amount of paper/energy saved, it is something to consider among everything else!

    In addition, another intangible aspect of this whole thing is the momentum that canceling your cards can bring. Cutting them up and canceling the accounts is empowering (or at least was for me). Each time I did this is gave me a shot of energy to tackle the next one. The message was consistent… I was going to destroy me debt. Somehow, freezing them in ice or locking them in a drawer just doesn’t seem as passionate. Personal preference, I guess!

  23. Luke Grand says:

    All this leads me closer and closer to the conclusion that credit cards are simply not worth the hassle factor. I think I’ll continue to rent and save to pay cash for a small home one day. Screw FICO and his mad scoring system!

    Just think, if enough of us took the same attitude FICO would cease to be so important in our society. As it is, we are all slaves to a mythical scoring model which requires to keep open trade lines and a small amount of debt to be considered succcessful. Sad.

  24. Stacy says:

    If the card has an annual fee, then my all means close it out.

    As was mentioned in a previous comment… you forgot utilization. Closing the account will hurt this ratio over the long term.

  25. Jamie says:

    Thanks! This was helpful!

    @ Tara – They have to put a reason for the score; doesn’t mean it’s super valid.

  26. almost there says:

    Sometimes it is a matter of principle to close a card. I received a notice that my minimum payment was going up from 2% to 5%. Even though I had a zero balance on the 24K limit credit card and hadn’t used it since I transfered the 2.99% BT for life to a lesser int. rate it still made me upset. The representative I contacted said it was raised because the president forced them to do it by passing the credit card reform bill. Which was hooey. The bankers just want to increase profit on people that had no where to go. They would have cancelled me anyway if I did not accept the change and having a zero balance. This helps me anyway because it lowers my outstanding available credit which another card company turned me down recently due to having too much avail. credit for my income. Bankers are predatory lenders at best. It felt good to tell Chase to cancel the card.

  27. Margaret says:

    If you are keeping the account open and are not entirely sure where it has been recorded (e.g. online stores that keep your number on file, ongoing bill payments, etc), you can always report the card LOST. Then you don’t have to worry that your number is floating around in someone’s database.

  28. Kat says:

    You should mention that if you keep a card, you really should use at least once every 6 months. Longer than that and any card I ever had inactive past that period cancelled me for inactivity. No point keeping it if you are just going to let that happen.

  29. rob says:

    As mentioned by Spaceknarf @2 — for more sane countries around the world – that unused $0 balance credit card is considered a liability for the full amount when you go for a mortgage. So getting rid of it increases your borrowing capacity.

  30. ShootDawg says:

    @almost there – comment #22
    “I received a notice that my minimum payment was going up from 2% to 5%”

    that is nothing to be upset about… the banks are not making more money off this change, they will be making less money..
    for instance, if you have $100 on the credit card, before the change, the minimum payment would have been $2. Now, it is $5. interest on $98 is more than $95.. with the change, you are paying your card off faster, and the bank is getting less money in interest.

  31. Jeremy says:

    I’m surprised that no one has mentioned:

    “The big one is that canceling a card results in a negative bump on your credit score.”

    This is often NOT TRUE. There is no penalty for closing a card. Two possible ways it might hurt your score are:

    1) Lower average age of credit account
    2) Higher utilization

    If the card is newer than your average card, 1) will keep your credit score the same at worst. It could improve.

    2) Closing a card will, by definition, increase your credit utilization %. However, if you have a lot of available credit, the impact will be minimal. And because the effect of utilization % on your score is not continuous, you very well may still end up in the same utilization % bin, in which case your score will remain unchanged.

  32. verbose says:

    We keep a paid-off card that has a high interest rate and no rewards (also no annual fee). The account was opened in 1994. It’s our oldest card, so I won’t cancel it.

  33. almost there says:

    #26,shoot dawg, I wasn’t upset I would pay less interest I was upset that the min pmt went up 150%. I like to borrow at below the rate of inflation and pay back with money worth less. By forcing a $200/mo pmt to $500/mo means less money for me to keep. Forcing people with less options to pay the increased
    minimum is unfair to them. I see it is changing terms of a contract (that’s why they must give you an option to not agree and close account).

  34. deRuyiter says:

    “…..if you don’t see a major move in your future, cancel that card. Doing so eliminates the temptation and eliminates the (small) chance of identity theft.” This would not actually be identity theft, would it? It would in effect be credit card theft or credit card fraud. Identity theft is stealing personal information to open new credit cards, take out loans in one’s name, to hijack the actual identity. Real identity theft is EASILY AND CHEAPLY stopped dead in its tracks by freezing one’s credit accounts with the three credit reporting agencies who HATE this because they are in the business of SELLING your credit inromation to anyone who inquires. Freezing one’s information also stops a person from taking out a credit card quickly / easily in his / her own name. It’s insurance against casually opening one of those store credit cards which offer 10% off the first purchase if you “open an account today.” If you NEED for anyone to get your information, you can unfreeze the information for a brief, specified period, and then freeze the info again. YOUR IDENTITY CAN’T BE STOLEN WITH YOUR INFORMATION FROZEN.

  35. Paul says:

    I didn’t know the negative bump on the credit score was for only one year. That’s great info. I’d say that makes it a no brainer. Cut up and cancel that plastic!

  36. sara says:

    #27, This comment is the closest to what I have understood. Suze Orman had a tutorial on Oprah and she stated that when a person closes a card, as long as they don’t carry a balance it shouldn’t effect your credit score because you haven’t changed your utilization ratio. Of course if you had a longer history with the card to be closed that would have an effect.

    With all of the changing bank policies right now many people are faced with closing credit card accounts to avoid annual fees or terrible banking practices. I closed my Chase credit card after being a loyal WaMu credit card holder because I had read so many horrible things about them and I didn’t want to wait around and find out what kinds of fees they would invent to charge me.

  37. Louchuck says:

    Interesting article, especially since I recently canceled my first credit card. I’m 23 now and I got the card when I started university when I was 19 and the annual fee was waived because I was a student. I graduated last year and I guess because I opened the account at a weird time I wasn’t charged an annual fee until recently. As soon as I was charged I called up the company and asked that the fee be refunded and my card canceled. My logic was that I have 2 other no annual fee credit cards that offer better reward programs than the first credit card I ever got so why bother paying the annual fee for a card that offers me far less?

    I’m wondering if your card does have an annual fee how this should change your decision to cancel a card?

  38. vckgss says:

    #19 LukeGrand
    What you’ve described is what Dave Ramsey calls a Sinking Fund. You save up for stuff you want before you buy it. Novel concept! This is what our grandparents always did. Now if we can turn the tide of people wanting it all NOW, we’ll all have more leverage with the banks. Another Dave-ism: “The borrower is slave to the lender.”

    The only downside of the cash basis is that a lower credit score results in higher insurance premiums. As more of us become debt free, and as Dave keeps talking about this issue, we should hopefully see an Insurance agency that recognizes the situation we’re in and realizes that debt-free people are responsible and a low risk group.

  39. Try not to worry too much about the credit utilization “bump”. Credit utilization becomes a serious negative when utilization hits or exceeds 80% of available balance, meaning you’re getting close to being maxed out. That IS a danger sign for creditors.

    If you’re credit is otherwise good, the bump will be minimal, if it even occurs. Credit scores are driven mostly by pay history and presence or absence of derogatory public records (BK, FC, judgements, garnishments, etc.). A loan noted as PAID SATISFACTORILY has much more impact than credit utilization in otherwise good credit profiles.

    No one but the credit repositories know what the exact mix is on credit scores, and they can and do change. It’s really hard trying to out guess the system here.

    The overriding goal should be to reduce or eliminate debt by what ever means makes you comfortable. Even if your scores fall by 10 points, that may be preferable to having an open line that could be subject to identity theft, or to the implementation of an admin fee that you didn’t know about since you probably won’t open your mail from the creditor of an unused account. An upaid admin fee will be marked as a derogatory or worse, and that’ll alone will affect your scores more heavily than lower utilization.

  40. Mona Brasseaux says:

    “The big one is that canceling a card results in a negative bump on your credit score. This negative bump goes away after roughly a year.”

    As a loan officer, and a credit repair consultant, I can tell you this is NOT the case.

    You are not PENALIZED for closing the account. You just lose the “point support” that you’ve built up by having the account open over time. And that remains until you replace it with another card – OVER TIME.

    Time is the factor in gaining points with a credit card. The first 6 months with a new card, you actually LOSE points (penalty), until you establish a pattern of having it report “satisfactory” for 6 months. You DO NOT have to charge anything to it. It will report as satisfactory with any balance, even $0, as long as payments are made on time. After 6 months you regain the points you lost, and after 12 months you start gaining points. And you gain even more, the longer you own the card, and are reporting as “satisfactory” each and every month. If you close the account, you lose those points you’ve accumulated, which are supporting the higher score.

  41. Tamara says:

    Trent,
    This article came at just the right time. I was actually going to contact you to find out what you thought about cancelling a paid off credit card.

    I could still use some extra advice though. My husband and I just in the last week paid off our only credit card. We’ve had this card for several years now, and the interest rate went up drastically on it. I am hesitant to use it anymore because of the high interest rate and since it is not a rewards card of any kind.

    These are the questions that I have:

    Would it be wise to apply for a second credit card with a better rate and one that is a rewards card? Would it be beneficial to use a new card such as this and never use the old card again, or should we use the old card every once in awhile for small things while using the rewards card as our main card? Would our credit score be affected if we never used the old card again?

    One more thing… we tried to apply for a new credit card in the last month, and we were turned down seemingly because we are new homeowners. How do you recommend getting past that problem if you were to recommend getting a new card?

    Thanks in advance!

  42. Bonnie says:

    Jeremy’s comment in #27 is right on target. If you’re not planning to get a loan anytime soon (i.e. in the next few years), then sure, you don’t need to be concerned about your FICO score. But for those of us who plan to buy a house in the few years, that FICO score is our lifeline. What matters most in determining whether to close a cc account is how long the account has been open and how it would affect your utilization ratio. If you want to close your oldest account and it would bump up your utilization ratio significantly, then you probably shouldn’t close the account (at least until after you’ve been approved for that loan you’re applying for). If it’s a newer account and won’t affect your utilization ratio much, then go right ahead and close it.

    To add to the confusion, Fair-Isaac puts everyone into “buckets” based on their length of credit history and average age of credit account and whether you have any significant dings on your history (such as bankruptcy, defaults, etc.) In calculating your credit score, you’re actually competing against the other people in your “bucket”. Each bucket has a maximum and minimum FICO score and those in higher buckets (i.e. longer credit/cleaner history) have very little leeway in terms of negative events on their account. In other words, if you’re in a higher bucket, positive events won’t cause your score to go up much, but negative events could cause your score to fall by more than expected. On the other hand if, you’re in a lower bucket, the opposite tends to be true (negative events have little effect, while positive events have a larger effect).

    For those who are actually interested in learning about Fair-Isaac’s confusing system, I strongly recommend the myfico.com forums. You can search for “buckets”, or the last time I checked, there were a couple of threads on how to get a score over 800 (with a bunch of posters who seem to have actually figured out the system). I’m nerdy, though, so I thought it was all very interesting. Others mind find trying to figure out the system frustrating or boring.

  43. slccom says:

    Reporting your credit card lost can impact your insurance premiums. I had to pay higher homeowner’s because my NUMBER was stolen. I guess the insurance company figured that I leave my credit cards lying around when I tame them places!

  44. Wendy says:

    You never know what will happen. I’ve been through a divorce, periods of unexpected or expected unemployment and now retirement. I prefer to keep my ‘emergency’ cards because you can’t get one when you actually need one. But, I will have to remember to use them once in a while. Amex just threatened to cancel the one we don’t use so we bought groceries and then put it away again for 6 months.

  45. If you have many card and you are on a new path of no or lower debt, I would say cut it and close the account. But if you only have 2 or 3 cards I will keep the account open and keep the card for emergencies and to help your credit score. You never know when you might need that card. Keeping the cards and not using them for luxuries takes discipline. If you don’t trust yourself, close the account.

    Good article, thank you.

  46. Georgia says:

    I was deep in cc debt – had 10/12 cards maxed to the limit most of the time. But, I paid them on time every time. It did not hurt my credit at all, as the bills were never late. I kept getting all the better rate ads and was able to get out of debt because of the good rates. When all the experts said that if your interest rate was at 14.99%, you were ahead of the game, all my credit – over 20-25k was at 9.9% until paid off. The next good rate was 4.9% until paid off. The last 3 years it was at 0% for 1 year.

    We bought a house, but the loan was from our small town banker and they take you and your history into account, as well as your credit rating.

    And, as to closing accounts – whenever I get my credit reports, all my accounts are listed, from the beginning on. They all say “closed by customer” or the like. Now I am retired, have had my cc number burgled, filed a police report and thus was able to freeze my credit permanently for free. No more debt for me.

  47. Mona Brasseaux says:

    “If you’re not planning to get a loan anytime soon (i.e. in the next few years), then sure, you don’t need to be concerned about your FICO score.”

    Unfortunately this is not true! Alot of everyday things depend on your FICO: Apartment Renting, Car Loans, Car/Home insurance, and even Job Applications.

  48. michael bash says:

    Suzi Orman said that taking the scissors to a credit card offers satisfaction, nothing else. You have to deal with the company to void your card. Otherwise you still have various liabilities.

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