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Whether or not you cancel a credit card is up to you. If you are thinking about making this decision you probably have a good reason. Many people want to cancel one of their credit cards because they don’t trust themselves, and others simply want to make room in their wallet.
No matter what situation you are in, you need to know the pros and cons of canceling a credit card.
The main benefit of this is that a cancelled credit card is gone forever. In other words, once you make this move you will never be able to use the card again.
If you are irresponsible with your money and have found yourself in credit card debt this is a move that could better your life.
Another benefit of canceling a credit card is that it could lead to better financial practices.
Putting every last expense on a credit card is not a good idea. If you get rid of all your credit you will have no choice but to avoid items that you cannot afford.
What about the downsides of canceling a credit card?
Many experts will tell you that this is a mistake because you will lower your credit score.
However, a large part of your score is determined by your debt to credit ratio. So if you cancel a credit card you will have less credit available, which will in turn negatively affect your score.
A credit card is perfect for emergencies; especially those that may cost a lot of money such as a car repair. If you don’t have a credit card you will have to figure out an alternative plan, which is not always easy.
As you can see, the decision to cancel a credit card is a tough one.
On one side this can help you avoid debt and better your financial situation. On the other hand if you cancel a credit card your credit score may take a hit.
Consider the pros and cons and how they will effect you before you decide for or against canceling a credit card.