Don’t close your existing credit accounts
It is usually better to not close your existing credit card accounts.
Sometimes, closing a credit card account can be a wise financial decision, but it’s important to do so in the right way.
When it comes to cancelling (Or closing) an existing credit card account, there are a few things you should keep in mind. First, make sure you understand the consequences of doing so. Cancelling a credit card can negatively impact your credit score, so it’s important to weigh the pros and cons before you make a decision.
Another thing to keep in mind is that you’ll need to cancel your card in the right way. If you just stop using the card, your issuer could continue to charge you interest and fees. So be sure to call the issuer and request a cancellation.
Finally, remember that cancelling a credit card can take some time. It can take up to two months for the account to be officially closed, so be patient.
If you’re still thinking about cancelling your credit card, here are some of the most common questions people ask about the process.
FAQ’s About Closing Credit Cards
1. What are the consequences of cancelling a credit card?
Cancelling a credit card can have a negative impact on your credit score. When you close an account, it lowers your available credit limit and increases your utilization rate, which can lower your score. Another big factor is how long the account has been open. If you have a long history with the card, it will negatively impact your credit score because closing the account will lower your credit length history which is a factor in making up your Fico Score.
2. How long does it take to cancel a credit card?
It can take up to two months for a credit card account to be officially closed. So, if you’re thinking about cancelling your card, be patient. It may take even longer for the credit card issuer to report the account closed with the credit bureaus.
3. What should I do with my credit card before I cancel it?
If you have a balance on your credit card, you’ll need to pay it off before you cancel the card. You should also call your issuer and request a cancellation.
4. Will my credit score go up when I cancel my credit card?
It’s possible that your credit score could go up after you cancel your credit card. This is because your utilization rate will decrease, which could have a positive impact.
Avoid Late payments
If you want to avoid late payments on your credit card, there are a few things you can do. First, make sure you have enough money in your account to cover your monthly statement. Second, create a budget and make sure you’re not overspending on your credit cards. You can use a spreadsheet to help you to budget your credit cards as well as your other monthly expenditures. Finally, be mindful of your credit utilization ratio and try to keep it below 30%. By following these tips, you can avoid late payments and keep your credit card balances manageable.
Never take out cash advances
It’s understandable to need cash from time to time but the last thing you should do is take a cash advance. When you take a cash advance you going to pay extremely high interest rates without grace periods and if you don’t pay it off immediately it can raise your balance and they could make your balance very hard to pay off.
Avoid charge-offs at all costs
Besides bankruptcy, charge-offs can have 1 of the worst effects on your credit profile. I charge-offs happens when you become quite late on making a payment on your credit card and your creditor has pretty much given up faith on you and they go in and close your account. The charge-off will remain on your account for 7 long years. What’s even worse is that your score will probably plummet over 100 points on one charge-off.
If you currently have a charge-off appearing on your credit report a credit repair company may be able to help. Credit repair company will dispute with your creditors to make sure that the charge-off is 100% accurate. If it’s unverifiable or misleading or inaccurate in any way there could be a chance for you to have that charge-off removed which will help your credit score dramatically.
We hope that these tips have helped you with ideas to either help you to improve on your credit score or to maintain your existing good credit. To learn more and to see some really cool credit myths please take the time to check out this related article.