Pros and Cons of Closing Unused Credit Card Accounts
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When carrying credit cards, people get tempted to open more and more credit card accounts. It's worth saying there's a wide assortment of various plastic money deals for all types of credit histories. And now that we can find a deal with really appealing options, we don't hesitate to apply for a new card. Meantime, having inactive credit accounts, we want to close them. Interestingly but this procedure seems so simple at first glance. But in reality closing inactive credit accounts may end up in unforeseen difficulties. Read more about closing credit card accounts, and learn how you can close inactive accounts without affecting your credit score.
The reasons for closing credit accounts may be various. Some people want to get rid of inactive credit accounts they haven't used for years. When transferring high-rate balances onto a new card, you may decide to close those accounts.
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To a certain extent, they are right. Unused credit accounts can charge you fees, when it comes to plastics with annual fees or high interest rates. All the more so, these accounts can become targets for identity thieves. In this case, closing idle accounts would be a good idea.
But oftentimes, after closing your old credit accounts, your credit score may drop. In truth, lenders are not that particular about open credit lines that you haven't used for years. This way, some old credit accounts may stand you a good turn, and boost your credit score. The older your account is, the better.
Be careful when closing credit accounts with an active balance. In fact, you can close your account to additional purchases, but you cannot possibly close the account until you've paid off the balance. Those customers who ignore a small balance may face late charges accumulating for nonpayment. Needless to say, it can hurt your credit history. Once your credit account is closed to new purchases, just pay off that balance as soon as possible, and close the account.
Some credit users share the opinion that it's enough to cut your plastics and throw them away to close the accounts. In fact, you need to send a certified letter to your creditor. In 10 days, you should receive the confirmation of closing your account.
As for your credit history, it is generally recommended to keep 4 or 6 credit accounts open. This generally allows keeping your debt to credit ratio in a good state. By all means, it's a good sign for lenders who view your credit profile.
All in all, before closing your credit account, you should figure out your goal. Weigh all pros and cons, and if closing your account will bring obvious benefits, don't hesitate to send a letter to your creditor. Once your account is old, you'd better keep it open!
