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Advice on closing a credit card account after paying off - The Bills.com Blog
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Advice on closing a credit card account after paying off
Question: I have a credit card that I have never activated. I decided not to and that I don't want it. Is it better to call the credit card company and cancel or is it better to cut it up and do nothing more? I also have a credit card with a ballance on it and when it is paid off I want to get rid of it also. Whatis the best for my credit score?
Answer: While simply cutting up the card will likely prevent anyone from using it without your knowledge, having a pre-approved line of credit floating around is not a good idea. You should contact the credit card bank and cancel the account, even if you never activated it. Once you have cancelled the account, you should destroy the card to make sure that your personal information is not used without your knowledge. By taking these steps, you should be able to prevent this account from affecting your credit report while preventing your credit profile being misused.
In regard to the account you are currently paying off, you should feel free to close the account
once you have paid it off if you do not intend to use the account in the future. I encourage most consumers to close paid off accounts in order to prevent them from succumbing to temptation and charging up a new balance after working so hard to eliminate their credit card debt. Closing accounts after paying them off may slightly lower your credit score, as closing lines of credit with $0 balances will increase your debt to available credit ratio, one of the major factors used in calculating your credit score. In addition, closing long established credit lines can have a negative impact on your credit rating. However, the small change in your credit profile closing this one account will cause is probably
worth the benefit of ridding yourself of this credit account and the temptation associated with it. After working so hard to pay off this account, it would be unfortunate for you to end up in the same position in a few months? time; closing the account will prevent this from happening.
To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Bills.com Credit Resources page at http://www.bills.com/credit/.
I wish you the best of luck in your future endeavors, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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