Tuesday, February 28, 2012
Conquer Clutter: Reduce the Number of Credit Cards You Have
Have you looked in your wallet or purse lately? Did you notice how many credit cards you have? Having too many credit cards can hurt your credit rating. It is best to limit yourself to 1-2 credit cards. What a nightmare it could be if your wallet was stolen along with a lot of different credit cards in it. Check with your credit card company before closing accounts to see how it will affect your credit score if you choose to close it. You can always put your extra credit cards in a container with some water and freeze them so you can't use them as easily. If it will hurt your credit rating too much to cancel the extra accounts, then just leave the cards at home when you go out and only carry one or two cards total. Next time you are offered the extra 10 percent to open an account, simply refuse and get out of the store as soon as possible before you change your mind.
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I thought it would be good to point out that there are a few more considerations when it comes to closing a credit card account with regard to your credit score.
ReplyDeleteYour number of open lines of credit, your average age of open lines, your total available credit and your credit utilization will likely all be affected in one way or another. It can actually severely hurt your credit score to close an account. Especially one that you have had for a long time. I would suggest removing the cards from your wallet or purse and placing them in a safe or other secure location. If you won't ever need them again, shredding them can be a good option as well. If the card has an annual fee, I would consider closing it anyway.
Mint.com wrote a good article on the subject. http://www.mint.com/blog/credit-2/what-happens-when-i-close-a-credit-card-112011/
Also, creditkarma.com and creditsesame.com are two great sites for getting a legitimate and free credit score from a couple of the three big bureaus. Creditkarma in particular will analyze all of the considerations I mentioned above.