Best Time to Close your Credit Card with Zero Balance. The general consensus is that you should keep all of your credit cards open, even if you no longer need them. This is the quick answer to your question because there are certain benefits we would consider in this article why you should do so.
However, there are other cases or other times that you should not keep your credit card with a zero balance open. And that is why this article on the best time to close your credit card with a zero balance is coming your way today.
Best Time to Close your Credit Card with Zero Balance
After you are finished paying off your credit card debt, you are always very happy because it is a great accomplishment. This is especially after you have worked long and hard to accomplish the task. The name of your credit card also leads to a strong credit score, which everyone strives to have. The only question is at which time it is best to close your credit card with a zero balance.
When is the Best Time to Close a Credit Card with a Zero Balance?
Below, we have listed several instances where it is better to close down your credit card with a zero balance. After that, we are also going to take a look at the reasons why you should not close your credit card with a zero balance. That being said, below is the best time to close your credit card with a zero balance:
- When you have too many credit cards and want to reduce them
The first instance we are going to be taking a look at today is if you have too many credit cards and want to reduce their numbers. You should not just keep too many credit cards around because you need to monitor them regularly in case of an unauthorised charge. So, if you have too many credit cards, simply close the ones with zero balances to focus on the ones with balances.
- When do you have better credit cards?
One of the greatest mistakes that people make is continuing to use credit cards that are not beneficial to them. Most of the time, your first credit card will definitely not be as attractive as your other newer credit cards. because they might have a lower credit limit or a higher interest rate. If you have other better credit cards, you can simply decide to close the old ones with a zero balance.
- If you do not want to get into another credit card debt
Nobody wants to start repaying credit card debt after they have simply worked very hard to pay off their credit card debt. If you have all the credit cards that you know, you might be tempted to miss out again. It is better to close them if they have a zero balance. When you think that you will be tempted to rack up more than you can afford on a credit card, you should consider closing it.
Reasons why you should keep your credit card open
Above, we have taken a look at three different reasons why you should definitely close a credit card with a zero balance. But that is not the end of this article because those are all the reasons why you should keep your credit card open. Below are some of the reasons why you should definitely keep your credit card open:
Lower credit utilisation
By keeping your credit card open, you can preserve your credit utilisation rate. Your credit utilisation rate is how much of your available credit card you are using. This is a huge factor in the amount owned portion of your credit score and it makes up 30% of your Fico score. What is the connection here? When you close your credit card, you lose 30% of your fico score. which reduces your credit utilisation rate.
Length of credit score history
Closing a credit card, whether it has a zero balance or not, simply reflects on your average length of credit history. The length of your credit history makes up about 15% of your total credit score, so simply reducing your credit score But if you do close a credit card account on a good term and standing, it will be reflected on your credit score report for 10 years.
Losing card benefits and perks
This reason is self-explanatory because after closing your credit card account, you will no longer have access to all the benefits and perks it has to offer.
An alternative to closing your credit card
If you have considered all the reasons and you later decide against closing your credit card, there are other alternatives that you can go for instead. This is especially true if you are not making use of the credit card in particular. Below are some of the alternatives that you can consider:
- You should definitely downgrade your credit card if you do not make much use of it, especially if there is an annual fee. You can simply downgrade to a non-annual fee credit card. Simply ask the credit card company to waive the annual fee if that is the reason why you want to close the account. Finally, you can also decide to go for a new credit card that has all the benefits that you want.
The bottom line is that if you still want to keep the credit card, you should simply make sure that you cut down on all the credit card costs if possible. You can also search for a new credit card with benefits that you like on the internet so that you will not have to get into credit card debt.
Best Time to Close your Credit Card with Zero balance FAQs
What happens when you close a credit card?
When you close a credit card, it is gone for good. However, to successfully close your credit card, you will have to pay off the final bills on it. Also keep in mind that if you close your credit card on a strong or good term, it will be on your credit history for up to 10 years and vice versa.
How do you close a credit card?
Closing a credit card account is easy. All you have to do is simply contact your card company about your intentions to close your account. Your credit card company will now give you further instructions on how to do so and successfully close your credit card account.
Is it better to close your credit card with zero balance?
In some cases when you have other better credit cards it is better to close down your credit card with zero balance. But keep in mind that closing your credit card will reduce your credit utilisation ratio which will intern drop your credit score.