Closing Small Credit Card

After paying off a credit card account, you are not required to close the account, but many consumers choose to do so. After struggling to pay an account, they want to rid themselves of the temptation to charge up the account again. It certainly makes sense when there are large annual fees, but you are correct to also consider your credit score.

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 or if you are being charged exorbitant fees then I definitely encourage you to close the account after paying it off.

Bills.com offers valuable information regarding what you need to know about credit, credit reports, credit counseling, and so on at the Credit Help Resources and Information page.

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/