Should You Cancel Your Old Credit Card?
If you are lucky enough to be one of those people who have actually paid off their credit cards and have some old ones lying around, you might have been wondering what to do with them. Or it had completely slipped your mind, in which case you should definitely read on, as simply forgetting about these credit cards may not be the best idea.
Why Get Rid Of Old Credit Cards?
There are two main reasons why you should cancel old credit cards. Firstly you should get rid of them to decrease any chance of fraud. Keeping old cards that you don't use regularly might also mean you don't check them regularly, leaving yourself wide open for fraudsters to get in and spend up.
The other main reason is your credit report. You don't want extra credit cards on your report, even if you don't owe anything on them, the capacity you have to borrow on these is what the bank will take into consideration when you apply for any further financial products such as a home loan or a personal loan in the future. So i fyou have a few credit cards under your name that have $10,000 limits on them, the bank might consider you more risky and charge you higher interest on any future products.
Why Should You Keep Old Credit Cards?
Apart from the reasons mentioned above as to why you should cancel your cards, there are sometimes situations where you could benefit from keeping your credit cards.
Keeping old credit cards means you will always have an emergency fund at the ready if you ever need it. Of course it would be better to try and save cash for your own emergeny fund, but if this is too hard or even if you need more than what you have already stashed away, a credit card can be a lifesaver sometimes.
Using credit cards for purchases will continue to give you extra protection. Some credit cards, usually platinum ones, offer free extended warranties on anything you purchase using the credit card. As long as you pay it off straight away this could be a great strategy.
Rewards, but you probably already know about this, if you had a rewards card to begin with you know how it works, and you'll know if it is worth keeping and using for these points.
How To Cancel A Credit Card Properly
Cutting up a card does nothing more than stop you using it. The credit card company has no idea that you have given your credit card a carving. Call, email or go into the branch to cancel your card properly. Check your final statements and make sure you receive some confirmation that your card has been cancelled and your account has been closed.