The 5 Credit Cards You Should Never Close

If you’re up to your eyeballs in debt and feel like you’ll never be able to pay it back the logical solution would be to close your credit cards right? Not only will this not make your credit problems go away, it may actually make them worse.

Below I’ve detailed the five credit cards you should never close no matter what.

Any credit card with a balance

Closing a credit card with a balance lowers your available credit limit to $0. Just like in credit score killer point #11, you still have a balance that needs to be paid off. Closing this type of credit card won’t make the problem go away. You’ll still need to pay it off in the end.

Your only credit card with an available credit limit.

Closing out the only credit card you have with available credit will again decrease your available credit while making it appear that your credit utilization is maxed out. Basically it puts you in the same position as #1.

Your only new credit card

Part of your credit score is determined by the type of credit you have, and keeping a credit card on hand will help increase your credit score By only having 1 credit card you might be turned down by lenders for future credit because they might think you don’t have enough experience with credit.

Oldest Credit Card Account

As was mentioned in point #3, creditors and lenders like to see that you have a history and experience with credit. They view borrowers with long credit histories as less risky than those just starting out.

If you close out your oldest account your score won’t be impacted immediately, but when that account falls off your record you might see a drop in your credit score.

Credit Cards with the best terms

I’ll tell you straight up, you’d be crazy to cancel your credit card with the best terms. You put yourself in a much better situation with a card that charges less interest and fees on purchases than one that charges more.

The only situation where you would be advised to close off an active credit card account to protect yourself would be in the case of identity theft. The reason your credit card company would advise this is to protect your credit from being further damaged by the thief.

Did You Know?

The proper way to close out a credit card is with a written letter. Also, keep a record when you send it and ask for written confirmation that your account is in good standing so you’re not closing a card that will hurt your credit score.

You should do just as much homework before you close a credit card as you do before you apply for one. Make sure that the card you’re closing won’t affect your credit score negatively.