Payoff Credit Card - The Bills.com Blog

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Payoff Credit Card

Friday, Aug 10, 2007

Question: If i pay off a credit card should i close the account?

Answer: After paying off a credit card account, you are not required to close the account, but many consumers choose to do so, as after struggling to pay an account, they want to rid themselves of the temptation to charge up the account again.

However, if you feel confident that you will not be tempted to charge up the account after paying it off (you could put the card in a bowl of water and then put it into the freezer!), then keeping the account open can offer several benefits. First, you will have available credit you can access in case of an emergency, such as an unexpected car repair. Second, paying off this account will lower your total amount of debt while increasing your total amount of available credit, thus
lowering your debt to credit ratio (or debt utilization ratio), which can have a positive influence on your credit score. Finally, if the account you are paying off has a long history of timely payment, you may want to keep it open after paying off the account. Your past payment history major factor used in calculating your credit score, and closing an account with a long history of positive payments could lower your
credit score.

While leaving an account open after paying it can be beneficial in the ways mentioned above, if you think you will be tempted to overuse or abuse this newly available credit, I definitely encourage you to close the account after paying it off. I wish you the best of luck with your finances, and I hope 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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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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