9 Reasons To Keep All Your Credit Cards | Refresh Financial

9 Reasons To Keep All Your Credit Cards

 Reasons To Keep All Your Credit Cards

Sometimes when we land ourselves in debt, we might second guess our credit cards and even toy with the idea of getting rid of them. But is this the best thing to do? Are there any repercussions to your financial position or credit score? Generally speaking, it's far better to teach yourself self-control than it is to throw in the towel and quit using credit cards.
Here is a list of 9 reasons to keep all your credit cards.

1. It Doesn't Eliminate Debt

- You’ll still have the debt to pay off, no matter how many of your cards you cut up.

2. You Will Increase Your Usage Percentage

- If you have two cards, each with $5000 limits and you have a total balance between the two of $5000, you’ve got a credit usage percentage of 50%. If you cut up one of those cards, your usage skyrockets to 100% and this will affect your credit score negatively. Usually, you want to keep your usage below 30%.

3. It Could Make Your Card Appear To Be Maxed Out

- Closing a credit card with a balance eliminates the remaining credit available on the card and makes the account appear to be maxed out. This will be a red flag to any potential lenders who look at your credit report.

4. Your Average Account Age Will Decrease

- Each credit product you have contributes to the average age of your accounts. The higher this average age is, the better it reflects on your credit score. Removing credit accounts will reduce your average account age, and this can hurt your score.

5. You Could Lose A Credit Booster

- If the card you're closing is in good standing, you're essentially getting rid of something that boosts your score.

6. You Lose Credit Diversity

- Different types of credit products contribute to your credit mix, and removing your card could make your credit accounts less diverse. Diversity in your credit mix is a factor that adds to your credit score.

7. You're Giving Up

- Instead of calling it quits, use this as an opportunity to learn how to responsibly use credit products! Practice good credit car habits, and curb the bad ones instead of throwing in the towel.

8. Certain Expenses Become More Difficult To Pay

- Getting rid of your only credit card makes a lot of things more difficult: booking travel, shopping online, managing your expenses in between paydays, etc.

9. The Record Exists For Up To 6 Years

- The record of your closed off card will stay on your credit report for up to six years, even if you pay it off.

 

3 Great Reason To Get Rid Of Your Card

 

1. Transfering Your Balance To A Lower Interest Card

- Although your average account age will suffer, this can be a great way to save money on interest.

2. You Have Too Many Credit Cards

- One or two cards is just right for most working class individuals. You are able to keep your usage low while building your credit. Having more can be overkill.

3. No More Annual Fees

- There are plenty of great credit cards out there that have no annual fees, so it might make sense to eliminate a card that has an annual cost.

Ultimately, the fate of your cards is in your hands. If you don't think you can get your spending under control, it might be time for a break. We try to urge people to first try and develop healthy credit habits before deciding to close any credit accounts.

Can you think of any other reasons to get rid or keep a credit card? Let us know in the comments!

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