There are many reasons you might want to cancel a credit card. You might be too tempted to overspend, or you’re not using your card enough to justify the annual fees. Does canceling a credit card hurt your overall credit? It can. While having too many credit cards can lower your credit score, so can closing a credit card. Here’s why.
Your credit utilization ratio is the amount of credit you’re using divided by the amount of credit you have available. You want to keep that percentage low – under 30% according to most experts. When you close a credit card, your ratio jumps up. Why? You no longer have the available credit from the card you just canceled, so the amount of credit you’re using on your other cards takes up a bigger amount of your total available credit.
Closing a Credit Card Causes Your Credit History to Drop
Canceling a newer credit card may not have much of an influence on your credit score but canceling a card you’ve had a while might. With credit cards, newer isn’t necessarily better. The credit cards you’ve had longer help increase the average age of your accounts, which boosts your credit score. The opposite is true, too. When you close a credit card, the average age of your accounts goes down, which can lower your credit score.
Should I Close My Credit Card?
Now that you know how your credit score could be impacted, you might reconsider whether you should close your card or not. Below are some options to canceling a credit card that won’t have the same effects on your credit score.
How to Close a Credit Card
Though it may have consequences, sometimes canceling a credit card is the right decision. If you still want to cancel your credit card, here are the steps you’ll need to take.
Keep Your Credit Score on Track
Keeping a good credit score is important and deciding whether to cancel cards is a process. Sudden financial emergencies can always happen though that may cause you to fall behind on your credit card payments you do have. That’s where LendNation can help. If you close a credit card or suddenly find yourself in a financial emergency, LendNation can help. LendNation offers flexible cash solutions, like payday loans online with instant approval. You can apply for a loan online in minutes or stop by one of our locations.
Loans are not available to members of the military.
Customer Notice: There are a wide variety of financial products available in the marketplace, so your choice of such products should match your financial needs. Short-term, small dollar credit used over a long period of time can be expensive. Certain restrictions may apply, including state database and credit underwriting standards and limitations. Visit a LendNation store or contact us for details.
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