Many people are interested in getting the number of credit cards that they have down to a smaller number. This is a smart choice since it is much easier to maintain an organized financial life if you have fewer credit cards. However, it might be wiser to just stop using the credit cards and to keep them out of easy reach rather than to actually cancel the credit card accounts completely. That’s because there are many good reasons not to cancel your credit cards.
Here is a look at some major reasons that you might not want to cancel your old credit cards:
• Your debt-to-credit ratio is important when getting new loans. Basically, new lenders will look at how much available credit you have and how much debt you have outstanding. It looks better to have a lower percentage of debt than a higher one. Canceling your credit cards would change this percentage because it would decrease your total amount of available credit.
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You benefit from a long credit history. If you have had credit cards for a long time then you show that you can be a good borrower over a lengthy time period. This is particularly true if you have a good credit history on those credit cards. Therefore, you benefit from not canceling those “aged” credit cards that you’ve had for a long time.• Canceling credit cards won’t make any immediate beneficial changes to your credit report. It is true that having too many cards can be bad for your credit score. (Generally, more than seven is considered too many in terms of the impact on your credit score.) However, the credit card account is going to remain on your credit report for up to seven years after the cancellation of the card so canceling the card isn’t going to make any sort of immediate improvement to your credit score.
• There is single credit and married credit. If you have credit cards from before you were married and you don’t use them, you may still want to keep them in case the marriage goes sour. Rebuilding credit after a divorce is a lot easier if you still have your own credit from the past.
These are all good reasons to consider not canceling your old credit cards just because you’re not using them anymore. However, you should be aware that there are some benefits to canceling the cards. The main benefit is that you don’t have to worry that you’ll suddenly spend that money because it’s not available to you anymore. If you are the kind of person who might impulsively run up massive amounts of credit card debt then the above benefits of not canceling your cards may not be outweighed by the benefits of canceling that card and protecting yourself from doing this. Additionally, there are long-term benefits to your credit report of having fewer cards so if you’re thinking about the big picture then you may want to cancel some unused cards. Weighing the pros and cons is important here.
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Yeah, I agree totally. If you quit using your credit cards, it shows you changed your mind regarding your personal debt. However, just stopping credit card usage won't be enough, you have got to begin spending much less as well and start to pay down your debt. Generally, it's most effective to start out by paying down on the debt you are obligated to repay least on, and so you remain inspired.