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Take precautions when closing credit card accounts

According to a report from the State Comptroller's Office, the average New York resident carried a $3,710 credit card balance in 2017. This is $600 more than the national average. If your credit card debt is overwhelming, you are not alone. Late bills, bad credit and financial instability creeps into our lives and the result can be crippling.

On the other hand, you might seek financial help or find a maintainable budget. You may be able to pay off a few credit cards. The feeling is phenomenal. After this accomplishment, you might want to close those accounts. If the plastic is unusable, you avoid the temptation of utilizing another line of credit. Individuals commonly make this mistake.

Effect on credit score

The truth is, canceling a credit card can temporarily damage your credit score.

A credit card with available credit helps your overall credit utilization. Credit utilization is the ratio of your credit card balance to credit limits. The more available credit you have, the lower your credit card utilization. If you have multiple credit cards with high balances, keeping a credit card account with zero balance benefits your credit score.


If you are planning on taking out a mortgage or loan in the near future, you might decide to maintain a credit card account that is paid off. It is wise to store that credit card in a safe spot or cut it up. This way you aren't tempted to use the card, and it is a smaller identify theft risk.

You might feel like you need to close an account. You can do so by paying off the remaining debt on that card quickly. Make sure you have a request in writing that states the closing was your choice, not the company's. The negative bump in your credit score lasts for about a year.

Credit card debt affects thousands of people. For some people, bankruptcy might make sense. If debt becomes unmanageable, there are options available to help you take control of your finances.

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