Closing your account6 of 7The rationale: You've finally paid off a card with a monster interest rate and are determined to rid yourself of that relationship for good.The rebuttal: While it may feel good to close your account and put the card in the shredder, doing so could actually have a negative impact on your credit score. By closing the account, you reduce your available credit line, which increases your ratio of debt-to-available-credit. Instead, keep the account open but keep the card out of sight. Ray suggests putting this "emergencies only" card in a safety deposit box at your bank or in your freezer at home. Related Articles:How to get a free credit scoreHow FICO scores evolved3 ways to master credit cardsGet secured credit cards?Related Links:Store credit card: good deal?Be a savvy cardholderHow to read your credit reportRead more credit card stories advertisement
The rationale: You've finally paid off a card with a monster interest rate and are determined to rid yourself of that relationship for good.
The rebuttal: While it may feel good to close your account and put the card in the shredder, doing so could actually have a negative impact on your credit score. By closing the account, you reduce your available credit line, which increases your ratio of debt-to-available-credit. Instead, keep the account open but keep the card out of sight. Ray suggests putting this "emergencies only" card in a safety deposit box at your bank or in your freezer at home.
Bankrate wants to hear from you and encourages thoughtful and constructive comments. We ask that you stay focused on the story topic, respect other people's opinions, and avoid profanity, offensive statements, illegal contents and advertisement posts. Comments are not reviewed before they are posted. Bankrate reserves the right (but is not obligated) to edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.
By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
A little research could save you BIG on interest.