There are several people who have decided that they would give up on their credit card, seeing the global recession. However putting down or closing your credit card account is not supposed to be an intelligent idea, while doing so one must be very aware of the consequences.

Why is it necessary for you to be aware of the consequences while closing the credit card? Your credit report could be one of the reasons. It can have both positive and negative effects. Having plenty of debt can put your credit score in bad situation while closing each credit card.

The age of the credit card plays a vital role in your credit score, saying that it means the longer you have maintained a credit card the better it would be for the credit score. However if you are given an option then you should close the new card rather then closing a old credit card, hence older card helps you to maintain your credit score. If you have decided to bring all your existing balance under one card then it is advisable that you keep your old credit card open.

Closing card with nil balance is not at all an intelligent thing to do, because it affects your credit report and also minimizes your debt to credit ratio. It is always suggested to leave the nil balance account open. Leaving this account open will help you in your days of crisis.

Keeping one credit card open is highly recommended. As you know that your credit score is based on one key factor, that is how many different types of credit card you have, there are one category of credit cards. To have one revolving credit card is important in case in future if you require any kind of loan it would help you then.

There is a process to close a credit card, first and foremost if you are closing your credit card make sure that you have paid the existing balance or transferred the amount to another credit card. Then inform the bank in written that you want to close the account. Always keep a copy of such notice to remember the closing date in case if any lender asks for the information.

Having credit card is not a bad practice; it is just that we tend to spend more without even giving a second thought that the amount we are spending is taking you towards debt. However having control over the expenditure is a good habit.

This entry was posted on Thursday, January 20th, 2011 at 4:35 pm and is filed under Credit Card. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.