High Interest Rates or High Fees
Cards that cost you money, especially when you aren't getting anything back, can be good candidates for closure. Sometimes, the benefits of a particular card (like one that earns you airline points) can be worth the annual fee. However, many people pay more in fees and interest than a card is worth.
Before you close a card because of what it costs you, try negotiating with the company. It never hurts to ask for a lower interest rate or a waived fee. The worst the company can do is say "No," and then you can go ahead and close it.
3. You've Already Made Your Major Purchases
If you're planning a major purchase that will require financing, like a car or a home, wait until that is complete before you cancel any credit card accounts. Since your credit score is almost sure to be at least a little bit higher with the cards contributing, it makes sense to wait to cancel them.
Even if canceling your cards won't hurt your credit very much, it could earn you a slightly higher interest rate. While a quarter (or even a tenth!) of a percent may not seem like very much up front, it can mean that you'll pay thousands of dollars more over the life of the loan. That's not worth it!
4. You Have Too Many Cards
While it's generally true that leaving cards open helps your credit, having too many open, in certain scenarios, can actually hurt you. Credit cards are considered revolving credit, which is the worst kind to have. If you have too much, especially in relationship to other types of credit, your score may actually be lower than it would be without a card or two.
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