| Close Credit Card Account |
| By Credit Federal |
Published
08/4/2009
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Credit Card
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Should I Close Credit Card Accounts and How to Send a Letter to the Company
Before you make a knee-jerk decision, carefully weigh the pros and cons before you send termination letters (Sample Letter For Closing Your Credit Card) to your card companies to close credit card accounts. Terminating credit card accounts could cause bad credit report scores.
Understandably; with all the information about credit card companies, the new laws and being in debt due to credit card bills, some consumers are busy closing most of their credit card accounts. This could turn out to be a big mistake. It could also hinder rebuilding credit using a credit card. Even if a credit card account has a deliquent balance, getting it current and paying it off as soon as possible can help rebuild bad credit scores.
Some think that closing a credit card account even though it has a balance, helps them get closer to being debt free as they will not have an account they can use to charge. Why close an account that the payments are being made just because you don't want to charge on the credit card anymore? Making payments on credit card balances is establishing good payment habits, like building a good report card.
It is proven that many consumers have as many as six or more credit cards, some may not even have a balance due. Consumers are closing accounts that have not been used so they are not tempted to make charges. A card without a balance is the perfect account to make a small charge on every month and pay it off in full, thereby creating a good payment trail on that account.
Maxed out credit card accounts can lower credit scores, so if this is the case simply work hard to paydown the debt and do not close the account. This will rebuild credit scores over time. Accounts that are the oldest, should never be closed, keep the account paid and in good standing, and only charge about 30% of the available credit for the account. This helps establish better credit scores that may look good when applying for an important loan like a home loan.
Credit card accounts that have high interest rates should not be closed just for having higher rates. Make small charges on the card and pay off the balance each month to further promote good paying history. Closing accounts many times will only hurt credit by eliminating good payment history. If you are too tempted to make needless charges, file the credit cards and leave home without them. Set a goal to keep them and let them help build good credit for you.
Many consumers who have bad credit from a credit card account, often don't realize they can use the credit card to gain better credit scores. It is harder now to get approved for unsecured credit cards, so closing them may not be the best move. Having an unsecured credit card is beneficial to track expenses for tax purposes or to use instead of carrying cash. It is just good money management to learn how to use one without over spending.
If all your credit card accounts are closed, you may find you can't get approved as easy in the future. When an unsecured credit card is not possible, apply for an instant approval card with no credit checks. Use the card to rebuild good credit. Keep credit cards and use them occasionally as a means to promote better credit reports.
If you have problems with bills, develop a budget and a money management plan, seek counseling, consolidation or debt settlement.
Here are more helpful credit card company letters:
Sample Credit Card Billing Error Dispute Letter
Sample Interest Rate Opt-Out Letter
Learn more information, free tips and advice about closing credit card accounts:
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