This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

3 Times It's OK to Close Your Credit Card

NEW YORK ( MainStreet) -- We've always cautioned readers to think twice before closing a credit card since doing so could hurt your credit score.

Account closures can have an effect on your credit-to-debt utilization ratio, especially when the card in question has a particularly high credit limit. Additionally, they can cost you the bonus points awarded by certain models when you have what's considered an ideal number of cards in your wallet.

It's always wise to think twice before closing a credit card, but there are situations where it's warranted.

It can also have an impact on the age of the credit file, but not in the ways most people think. Closed accounts actually continue to appear on a person's credit report for 10 years after a customer has formally gotten rid of the card, so those who replace the card with another product aren't likely to see much damage down the road; their new cards will have supplemented their credit history.

Regardless of these potential consequences, there are certain instances where closing an account is certainly warranted. We take a look at these situations and outlines how you can minimize the damage done to your credit score.

Your annual fee is too high.
Rewards cards are known for carrying high annual fees, which cardholders are required to pay whether they're actively using them or not. Those who aren't spending enough to reap the rewards and justify the annual fee may feel it's time to close the card and take their business elsewhere. (There are certainly decent rewards cards out there that don't have an annual fee attached.)

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.47%
FB $81.53 -1.07%
GOOG $565.06 3.30%
TSLA $218.42 -0.08%
YHOO $44.52 1.89%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs