Is it necessary to close my credit card account after I paid the balance? Or can I just cut the card up?

Question

Every so often I transfer my balances to new cards with 0% apr on them, but I just dont know if it will hurt my credit to have a bunch of credit cards in my name even if they all have no balances. Any info is appreciated!

Answer 1

Cut the card in half, and send it to the issuer via certified mail return receipt requested.

Also enclose a letter stating that since you've "paid" your balance, you no longer wish to do business with them at the close of the current billing cycle.

If you send it certified, then the issuer can't claim they were never notified that you wanted to close your account.

By doing all of the above, you avoid annual fees and/or minimum finance charges for card(s) you're no longer using. Just be sure that the balance has actually been transferred to the new card first.

Answer 2

Lots of different ways to look at this. Suze Orman recommends keeping the account open. About 30% of your FICO credit score is based on how much of your available credit you are using. The more unused credit you have, the better.

However, temper this advice with the fraud concerns (probably minimal risk) and not having too many cards. I used to do the same thing about 7 years ago with a $14K balance. In those days, the card issuers gave FREE balance transfer checks so I could control the timing of when to move balances. I bounced that sucker around several times, each time getting about 40 days of free interest due to the closing date and grace period. Today, this is not possible because you cannot control the actual date when balances move. You also get dinged 3% each time you move a balance. Those 3% charges can add up big time.

In the end, you don't want to have a dozen dormant cards on your credit report. That looks irresponsible. I have two or three.

Answer 3

This is what makes up your credit score:

1. Payment history-35%
2. Total debt owed vs. available credit-30%
3. Length of time establishing credit-15%
4. Types of credit established-10%
5. Inquiries and New acconts-10%


Ok, and now for the real answer.

Don't close the account, don't cut up the card. When you close the account, you affect factors 1-4, which can lower your score. Also, don't cut up the card because an inactive card doesn't help your score at all. The easiest way to do this would be to find something you buy or pay for every month and dedicate that card for that. Pay it off and repeat the process. This way, you're still building credit by showing activity on the card, but you're not going into debt while you do it. I'll use what I do as an example. I subscribe to the TrueCredit credit monitoring service every month for $14.95. I dedicate one of my credit cards to that and that alone. I have a Netflix subscription that I do the same thing with another card. This way, the price is always the same, and I know exactly what I'm paying every month. I keep the cards just for these purposes put up in a safe place. while I use my debit card for other purchases.

Keep in mind that you've already applied and got approved for these cards, and their now a part of your score. Cancelling any of these not only limits the payment history on all the open account, but it decreases the combined available credit on all your cards, making it look like you owe more than you're capable of borrowing. Also, depending on when it was opened, closing an account can give the appearance that you established credit more recently than you have. Credit is designed to be used over time, and credit cards are a testament to that. Credit cards are considered to be revolving credit, which means that you can use it over and over and over. Car notes, have 4,5,6 or even 7 year terms, while mortages have 10,15, and 30 year terms. As you can see, it's designed to be used over time.

So with all that said, my advice would be not to close them, but use them very lightly and put them in a safe place.

Answer 4

Credit card balance transfer is one of the preferred ways to get rid of credit card debt and is used by many people to get immediate relief. Credit card balance transfer essentially means that we transfer our outstanding balances from a high APR credit card to a credit card which offers low APR's. A 0% Intro APR credit card is the preferred credit card to transfer balances, but because of the widespread misuse of such credit card offers, credit card companies have withdrawn all such offers.

Indeed balance transfer saves a lot of money and can save things from going worse, but many people simply don't know the right way to do balance transfer. This article takes a look at the correct process to initiate and complete the balance transfer.

The first thing to look out, when a person wants to transfer his balances is a credit card which offers the lowest apr rates and lowest balance transfer fees. Many online credit card companies offer credit card comparisons. It is indeed a good practice to search for the credit cards using their services and decide on a credit card which offers the maximum savings. It is important to note here that balance transfer APRs depend on a person's credit history. If the credit card in question offers the lowest rates, it is definitely for those with the best credit ratings. There are different balance transfer apr's for people with lower credit ratings. So, it becomes imperative that one chooses the credit card which offers the lowest apr and balance transfer fees for his credit ratings. Read more from: http://www.credit-card-gallery.com/article/414,The_right_way_to_credit_card_balance_transfers

Answer 5

Cutting up the card does not cancel the account. Closing the account closes credit history and that could be a negative on your score. Having available credit can come in handy in an unexpected emergency. The annual fee is worth it just so you don't have to kiss a bank officer's butt for a loan.
Good luck.

Answer 6

cut and cancel the card and any other card you have.
Dont worship at the alter of the almighty fico score.

They only reason to worship the fico score is if your gonna borrow lots of money and pay lots of interest.

Live on less than you make. You will win with money.

A low fico score from not paying your bills/debt is trouble. If you have a 0 score from not borrowing money then you can still get an apartment and a job and a home loan.

A debit card will do anything a credit card will do except get you into debt. It has the same protection as a credit card as long as it has a visa or mastercard logo on it. It says so right on their website!

Debt Free is the way to be!

Answer 7

your credit score is based on your credit experience. If you close that account and im sure u have, and u close it your score can go down. SPecially if the others have a high balance. If u have a 0 balance, just leave it open, and use it every now and then for goas or something small that u can just pay right away when ur statement comes in and u wont get penalized

Answer 8

It always shocks me to see so many people who think that canceling cards is good for your credit score. Go out and read some articles on the subject. It’s not as cut and dried as some other answers might lead you to believe: http://www.google.com/search?hl=en&q=should+I+close+credit+account. My personal favorite authority on the subject is Suze Orman. If you get the chance, check her out on MSNBC or read some of her books.

Yes, you can have too much available credit. My mom plays the same game, and one company refuses to give her credit because she already has too much. However, closing a card erases it from your credit history and that can harm your score too. Let’s say you have one credit card that’s 10 years old. If you cancel that and open a new card, you have erased 10 years of your credit history and hat can hamper your ability to get financing down the road.

Answer 9

Cut them up but don't cancel them. If you cancel them you will loose all of the credit history with that card. This is partially how your score is calculated. It wont hurt you to leave it open. Just don't go over six credit cards.

Answer 10

You are advised to close the account. If you do not close it, it will appear on your credit report as open, even if it has no activity. When you decide to apply for additional credit elsewhere, this may get in the way, since an open card can always be used again. Hence, you may be denied for additional credit simply because your credit file shows that you have the ABILITY to incur large debt, due to the open accounts.,