What happens if you close a credit card account?

By closing the account, you’ll increase your balance/limit ratio, causing further damage to your credit score. Your balance/limit ratio, or your credit utilization ratio, is simply your credit card balance divided by your credit limit. (If your balance is $200 and your credit limit $1,000, your credit utilization ratio is 20%.)

How do I Close a credit card?

While closing a credit card can be as simple as contacting your bank and requesting that it closes the card, there are a lot of variables to consider first. You should think about if the card has an outstanding balance, if there are alternatives to closing the account and how closing the card may affect your credit score.

What causes a credit card to close?

Here are some of the most common issues that prompt people to close a credit card: Excessive spending: If you feel you are spending too much money, you may figure the best way to regain control and resist the allure of seemingly painless spending with plastic is to close the credit card account.

How often should you close a credit card account?

Simply use the card once every month to buy a lunch to make sure the account is “active” so the issuer won’t close it. There are two main reasons to close a credit card account. The first is when you cannot control your spending on the card. At that point, the effect on your credit score is far less important than eliminating future debt.