When Should You Cancel a Credit Card?

Canceling a Credit Card At Bank

If you cancel a credit card, you could improve your credit situation and streamline your finances. On the other hand, cancelling could actually worsen your credit score and make you less attractive to lenders.

The Pros and Cons of Closing a Credit Card

Many cards charge some kind of annual fee, especially if you’re not making a certain amount of purchases each year. If you have a card you’re paying for but not using, it only makes sense to cancel. You might cancel if you have a shopping problem — closing avenues of easy credit should minimize your temptation to spend. Also, it’s often easier to pay off multiple cards by taking an installment loan.

However, keep in mind that keeping some debt on the books can be good for your credit score. You should be especially certain that closing credit cards won’t mean using too much of the available credit on your remaining cards — this is known as a high credit card utilization rate.

What to Do When Closing a Credit Card

If you are going to be closing one or more cards, follow these important tips:

  • Start by cancelling cards with high fees (you can sometimes ask credit card companies for a better deal if you’re thinking of cancelling).

  • Remember that you can cancel accounts with an active balance. You’ll have to keep making payments but can’t spend any more on that credit line.

  • Keep some accounts open. Signs of active and responsible borrowing are good for your credit score.

  • Check your credit reports for updates and errors after you close them.

What Not to Do When Closing a Credit Card

When you’re cancelling or thinking of cancelling, there are a few things you shouldn’t do:

  • Don’t close the oldest account — this makes your credit history look short.

  • Don’t just throw away cards without closing through the card’s customer service department.

  • Don’t feel pressured to cancel several at once. This could look suspicious to creditors, so space out closures over time.

Speak to Xpress Cash About Taking an Installment Loan

If you’d like to close a few credit card accounts and consolidate their debt, installment loans are a great option. Contact Xpress Cash today or visit your nearest location — you’ll find branches in Michigan, Idaho, and Wisconsin.